Kaloti Precious Metals-Morning Market Report-Monday, October 24, 2016

Market Daily & Weekly

Note: Indications only, open and closing prices are bids; Data source: Bloomberg; Times as per Dubai

Fundamentals and News

Gold futures tally a 1% gain for the week

Gold futures finished a few cents higher on Friday to tally a gain of roughly 1% for the week.

Uncertainty surrounding the outcome of the U.S. election and the timing of Federal Reserve’s next interest-rate hike helped to lift investment interest in the yellow metal despite some strength in the U.S. dollar.

December gold future contract tacked on 20 cents to settle at $1,267.70 an ounce, rebounding from earlier lows under $1,262. Prices had settled near $1,269 midweek, a more than two-week high, and scored a gain of about 1% this week.

The U.S. dollar strengthened Thursday and Friday against the euro, in particular, in the wake of the European Central Bank’s decision to leave its monetary policy unchanged and accommodative.

The ICE U.S. Dollar Index, a measure of the U.S. currency against six rivals, was up about 0.5% Friday. The dollar and gold often move inversely because a firmer buck leaves dollar-priced commodities less desirable to purchasers using another currency.

“The metal is very reactive to any surge in the dollar and the dollar index is on the upward trend,” said Naeem Aslam, chief market analyst at ThinkMarkets. With increased odds for another Federal Reserve interest-rate hike in December, “the only way for the index is to move higher, which is going to put pressure on the metal.”

Still, spotty U.S. economic data last week and, at times, this week has caused some investors to rethink the likelihood of a late-year Fed interest-rate hike. Currently, Fed futures trading indicates that a solid chance for a December move remains priced in to trading. Precious metals, which don’t offer a yield, can see demand diminish compared with investments that bear a yield in a rising-rate climate

Indian Government is said that it is considering reducing import tax to 6 percent from 10 percent, Business Standard reports, without saying how it obtained the information. Decision on cutting the duty may be taken at a meeting called by finance ministry in third week of November

Palladium futures tumbled to the lowest in more than three months amid signs of weakening investment and physical demand for the metal used in auto pollution control devices. Automobile and parts dealer sales fell 0.5 percent in August to C$10.9 billion ($8.17 billion), leading the third straight decline in the nation’s retail sales, Statistics Canada said Friday in Ottawa. In the U.S., sub-prime borrowers arefalling behind on their car loan payments at thehighest rate in more than six years, S&P Global Ratings said earlier this month.

Data Forthcoming Releases

Courtesy: http://kalotipm.com.sg/kaloti-market-report-24th-october-2016