Sunday, August 26, 2012

how will gold price next week 27 - 31 august 2012

how will gold prices next week 27 - 31 august 2012 : Gold futures ended Friday’s session little changed near the highest level since mid-April, as prices remained underpinned by expectations that central banks around the world would soon announce fresh stimulus measures to help spur weak global growth.

On the Comex division of the New York Mercantile Exchange, gold futures for October delivery settled at USD1,670.75 a troy ounce by close of trade on Friday

On the week, gold futures added 3.3%, the best weekly performance since late-January.

Gold futures were likely to find support at USD1,610.95 a troy ounce, the low from August 20 and near-term resistance at USD1,679.15, the high from April 13.

Gold prices have rallied in recent weeks, climbing nearly 5% since August 20, amid growing hopes policymakers in the U.S., Europe and China will introduce fresh easing measures to prop up their respective economies.

Gold futures broke above their 200-day moving average after Wednesday’s minutes of the Federal Reserve’s August meeting showed that “many members” think additional easing may be warranted "fairly soon" unless there is evidence of a "substantial and sustainable" strengthening in the economic recovery.

In addition, Fed Chairman Ben Bernanke told a congressional oversight panel on Friday that the U.S. central bank has room to deliver additional monetary stimulus to boost the U.S. economy.

Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would pump more money into the financial system.

Gold gained as much as 15% earlier this year to hit USD1,790 an ounce after the Fed said in January it would keep interest rates near zero until at least late 2014 and indicated that it could introduce a fresh round of asset-purchases.

However, prices have lost almost 7% since late February, as the Fed failed to deliver more easing and amid concerns over the euro zone’s deepening debt crisis, which has fueled demand for the precious metal's hedge, the greenback.

Growing expectations that the European Central Bank will implement policy measures to help stabilize the euro zone's sovereign debt markets at its next policy meeting in early September further supported the precious metal.

German Chancellor Angela Merkel rejected Greek pleas for an extension to its economic reform program on Friday, underlining worries over the region’s debt crisis.

Following talks with Greek Prime Minister Antonis Samaras on Friday, Chancellor Merkel said it was up to Greece to show that it could implement the austerity measures agreed with its international creditors, but reiterated that the country should stay in the euro zone.

Gold prices also drew support from ongoing expectations of near-term easing in China.

Data released Thursday showed that China’s HSBC Flash Purchasing Managers Index fell to a nine-month low of 47.8 in August from a final reading of 49.3 in July, as new orders slumped in the face of weakening global demand.

The disappointing data added to ongoing speculation policymakers in Beijing will cut banks’ reserve requirements or benchmark interest rates again after inflation cooled to a 30-month low in July.

The People’s Bank of China has lowered both twice so far this year in an effort to boost lending and stimulate growth.

Expectations of monetary stimulus tend to benefit gold, as the yellow metal is seen as a safe store of value and inflation hedge.

From a technical standpoint, the precious metal has further room to march higher after prices broke above a range that had been in place since May, indicating bullish chart signals.

In the coming week, markets will be looking ahead to a speech by Federal Reserve Chairman Ben Bernanke at an annual symposium in Jackson Hole, Wyoming at the end of the week, amid ongoing speculation over how close the U.S. central bank is to implementing more stimulus measures.

In addition, the U.S. is to release revised data on second quarter economic growth.

Gold investors will be closely watching U.S. data in the second quarter for clues as to the likelihood of a fresh round of monetary easing, which could potentially hurt the dollar and support gold.

Elsewhere on the Comex, silver for September delivery settled at USD30.73 a troy ounce by close of trade on Friday, the highest since May 2. Silver prices soared 8.85% on the week, the best five-day performance since October 2011.

Meanwhile, copper for September delivery gained 1.9% over the week to settle at USD3.482 a pound.

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