Gold Fundamental Analysis

[Samirofi]

January 5, 2016


soared $11.80 today as the geopolitical situation between Iran and Saudi Arabia continued to escalate and Chinese equity markets halted trading after PMI missed forecasts. Gold is trading at 1072.00. Gold was bolstered by safe-haven bids following rising geopolitical tensions in the Middle East that knocked equities and the dollar lower.

Saudi Arabia cut ties with Iran on Sunday, responding to the storming of its embassy in Tehran in an escalating row between the rival Middle East powers over Riyadh’s execution of a Shi’ite Muslim cleric. Iran’s top leader, Ayatollah Ali Khamenei, predicted “divine vengeance” for the execution of Sheikh Nimr al-Nimr, an outspoken opponent of the ruling Al Saudi family.

Asian shares and currencies fell on Monday due to tensions in the Middle East and soft Chinese data. The dollar fell to a 10-week low against the yen, also seen as a safe haven. A weaker dollar makes gold cheaper for holders of other currencies.

Oil gained about 2 percent on Monday due to the fallout in the Middle East. Higher oil prices support bullion, as gold is seen as a hedge against oil-led inflation. Investors bet on gold as an alternative investment during times of geopolitical and financial uncertainties, though safe-haven rallies typically tend to be short-lived.

[Samirofi]

Gold Weekly Fundamental Analysis – February 8-12, 2016

Gold soared this week adding 5.19% to close at 1174.30. Gold scaled an eight-month peak on Friday as buyers rushed to buy jewelry in the marriage season besides protecting their investments in an asset, which enjoys safe haven status at times of choppy stock markets.

As a non-interest bearing asset, dollar-denominated gold becomes less attractive if US interest rates rise. Market players said a firming global trend - as dollar extended losses amid fading expectations of a US rate hike this year, boosting appeal of the precious metal - mainly kept gold prices higher. The dollar's retreat has been sparked by tepid US data, raising concerns over the strength of the economy and dampening expectations of further rate increase this year.

Falling equity markets, both in developed and developing markets, credit and currency worries in China and monetary easing from major central banks other than the US Federal Reserve have made gold look more attractive.

While stocks were plunging on Friday, the biggest gold exchange-traded fund closed out its biggest weekly advance in 2 1/2 years.

The SPDR Gold Shares (GLD) added 1.6% to $112.32 on Friday, capping a 5.02% weekly advance that was the biggest since July 2013 when it rose 5.11%. Before then, you need to go all the way back to October 2011, when GLD added 6.3%. Gold futures finished the week up 3.7% at $1,157.80, while silver futures rose 3.8%.