Precious metals ended the U.S. trading session on a two-week high in the fourth week of December. Investors bought gold and silver in the midst of a fall in mortgage applications, which pushed the greenback to a two-week low. In February Comex, gold was up by $6.50 (A$ 8.48) per ounce at $1,270 (A$1,657). March Comex for silver, on the other hand, was up by $0.140 (A$0.18) at $16.30 (A$21) per ounce.
Despite the surge in the precious yellow metal’s prices, gains in good delivery gold were weak due to a rise in U.S. bond yields. The congress passed the U.S.’ biggest tax overhaul in decades, and a weaker dollar makes gold attractive for Forex investors. Higher treasury gains diminish the appeal of non-yielding good delivery gold.
Gold prices increased by 3% from a half-year low of $1,235 (A$1,612). The precious commodity continues to fluctuate at around $1,250 (A$1,631) and $1,270 (A$1,657) as most countries are approaching the festive season. Wall Street investors seem to have taken a bow at work, and are relying on precious metals in case they need to protect their assets in the final moments of the year. Prices are on track to record the slimmest trading range in the last quarter of 2017.
In November, analysts viewed that gold futures would fluctuate at around the $1,255 (A$ 1,638) to $1,260 (A$ ,644) mark by the end of 2017. However, Nadex states that the future contracts’ prices today prove that the initial forecast was wrong. The daily candlestick chart below shows that gold’s bottom is at $1,243 (A$1,622) — its lowest levels since July’s prices. Seasonality suggests that gold’s prices are on the uptrend but that may change since the Commitment of Traders Report states that a strengthening of greenback’s fundamentals will immediately make investors bearish toward gold.
The orange-shaded part on the chart from $1263 (A$1,648) to $1268 (A$1,655) has been an important support for gold since the 3rd quarter of the year but investors can expect this region to turn into resistance. The next level would be the upper green trend at $1,285 (A$1,677) that links August’s high to November’s prices. At this point, investors can expect the resistance to happen.
As for ETFs, the SPDR Gold Shares declined by 1%. Low prices for gold ETFs was due to the increased demand of real gold abroad. Experts suggest that gold prices may start to fall by the start of 2018 at $1,200 (A$1,566), and decline further by the second quarter of 2018.
“We see the decline in gold as evidence that ‘fear’ effects, which had been keeping gold supported, have at least partially moderated as U.S. tax reform and the transition to a new (U.S. Federal Reserve) chair appear to be going smoothly,” Goldman Sachs wrote in a research note.
As for other precious metals, platinum’s prices were up by 0.2% at $916 (A$1196) per ounce. Palladium climbed by 0.5% to $1,027 (A$1,340), which isn’t far from its previous peak of $1,038 (A$1,354). Palladium’s current prices have been its highest gains since 2001.