12/14/2015 7:24:44 PM
捷凯金融 - 金价似有逆转态势,原因何在?

GKFX - The Gold price -  why  is it apparently defying trends ?- 081215

Seasoned gold watchers will    aware that an interesting and perhaps confusing anomaly took place in the market over the past week suggesting that Gold is no longer being driven purely by the impending interest rate rise.

The metal fell back yesterday( Monday) but  after a sharp $30 rally at the end of last week, keeping it only modestly above a recent multi-year low.

It was a relatively rare example in recent sessions of the asset behaving as the market expects.

The bounce on Friday, for instance, came after a stronger-than-expected jobs report that convinced most traders the Federal Reserve will now increase interest rates in a little over a week's time.

This latterly explains why gold confounded expectations. Despite the non-farms payroll report beating expectations with 211,000 new jobs – and an October revision taking that month to a massive 298,000 - the dollar barely moved.

About an hour after the report was published the currency had advanced around 0.25 per cent against the pound and 0.1 per cent against the euro.

Gold had risen only modestly while the dollar fell sharply from a multi-year high on Thursday, amidst a the market tantrum over central bank stimulus in Europe. Then on Friday as the dollar laboured it made some belated stronger gains and rose around 1.7 per cent to $1,080. Confused ? I know I was .

Now, as we all get taught. Non-yielding assets like gold tend to fall when rates rise, as it becomes comparatively unattractive next to income-generating assets.

Instead of doing that, it rose by more than $20 to $1,086 an ounce. Then yesterday, amidst  a wider energy led commodities rout, it fell back to around $1,073.

So just what is going on?

Well we should remember first that above all the value of the dollar will always move inversely to that of gold , So dollar up, gold down ad , viceversa  moveing in the opposite direction to the dollar, against which it is used as a hedge, so when the currency fell on Friday due to a 3% surge in the euro, the precious metal advanced eaqually strongly . The dollar was back on form yesterday has remained at historical highs for a number of sessions, marking its best period in several years so true to form Gold gave up much of the hard won gains .

Then there is the money wave . This is the tsunami of investment capital in the hands of the alternative investment community – The Funds as they are collectively referred to and their price distorting effects of a huge bet on a price fall to come.

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According to CFTC data hedge funds are currently invested into their biggest ever 'short' position in the metal.  The rally on Friday was so strong because of a modest amount of 'covering' of these positions after gold defied predictions and moved upwards.

Where to from here?

Funds are still in a record short position, so there remains heavy  professional expectation of a price fall to come. But this of course is also ammunition for a mega bounce if the Fed disappoints again and opts to hold , unlikely though that seems

Some reckon everything is now already priced-in; the consensus is that an actual rate rise will trigger a sell-off. The FT noted  gold’s initial  subdued reaction was partly because the jobs report was expected to be strong – and in any case it would have taken a terrible reading for traders to shift from a prediction that rates will rise.

In short, a hike may now be priced in, which could be good news for gold investors as it might cap the downside risk.

The best that anyone can say is trend will be unpredictable in the lead-up to the meeting - but most suggest if the Fed holds its nerve there will be a subsequent tumble.

Banks like "Goldman Sachs and JP Morgan continue to forecast gold prices below the $1000 price in early 2016."

 

The ECB’s  president Mario Draghi had as we all know  talked up the EU support package for weeks. In the event, it was a modest 0.1 per cent cut in already-negative bank deposit rates and an extension (but no increase in scale) of the ECB bond-buying programme. Result ? red faces all round and a short sharp pain as the euro shorts bailed .

Other Traders, who some claim have "lost faith" in the ECB, bought into the euro and dollar-traded commodities including gold and sold off equities.

In simple terms, there was a major boost of around three per cent in the value of the European single currency against the dollar, which has been at multi-year highs.

Commodities like gold are more expensive to overseas buyers when the dollar is strong, so this unexpected reversal makes them more attractive and prompted the sharp increase.

How low prices will go is not clear. If and more likely when rates do rise as expected on the 16 December when some traders are talking about a sub-$1,000 price.

However this has been coming for so long now  the market has been  positioned  with the expectation of the rate rise for months with  open interest on the short  position continuing to build.

 

looking forward, as ever gold’s immediate future rests with the dollar. We are not looking for a significant further rise now in the dollar. At the same time, while we think the dollar could correct a bit to the downside, we do not think the it will begin a downward trend yet either. We would not be surprised to see the dollar trade in a range near present levels for several  months to come . However we do think that Longer term the dollar will move lower. The huge trade data and some improvement in overseas growth will make it more difficult for the net capital inflow to outpace the $500 billion plus U.S. trade deficit that it has to exceed in order for the dollar to move higher. In view of this we would expect gold to consolidate within this range now notwithstanding the widely anticipated Fed Interest rate hike as we think this is now well in the price

In our view should rates rise, gold will probably fall again – perhaps sharply initially , possibly below $1,000. Then recover as the shorts take profits after that the trend is less clear.

If the market believes rates will not rise much further, getting over the first hurdle could bring back some confidence, the dollar might wane and gold could rally. Unwinding all that short money might even make a bounce quite strong.

Alternatively, a sustained rally in the dollar could push gold – which is still expensive compared to other metals – much lower.

The reality is probably somewhere between the two views

Macquarie analyst Matt Turner said and here we quote : "We're seeing the end of the second act of a three-part drama for gold. The first part was post-financial crisis, when the Fed was easing and gold prices were going up.

"The second part has been since 2013, when the Fed has been moving towards its first tightening. Now we have to see what happens in part three.

"There doesn't seem to be any reason to see a big gold bounce until the Fed actually raises rates."

These two factors, combined with the ongoing weakness in the Chinese economy that could affect buying in one of gold's biggest markets, means that in our view the next significant move in the price is likely to be lower.

The reaction to the US jobs report on Friday was just a coincidence of timing, an anomaly .The Fed will act, and gold should fall again. If it doesn't drop, it might suggest traders believe the rise is now 'priced in'.

Assuming gold does take another dive, it is less certain how low it will go. Some wild predictions  we have heard suggest it could slide all the way down to $350 eventually, while others reckon it will not go much below $1,000 an ounce. Our own view is that we are headed somewhere towards the $950 region which if achieved will likely stimulate a small investment from your truly .

Australian bank Macquarie believes that, whatever happens with rates, after a shallow dip, gold will recover and average a steady $1,100 early next year as global economic and political tensions add to its safe haven potential . But that’s gold for you – everyone has a view .Even my wife !

Expert

Alex Heath
策略研究员

金融生涯长约40年,成为LME的一名银&锡交易员是Alex Heath职业生涯的起点。精通于LME基本金属在期货、期权等方面的风险及研究。曾供职于LM...
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