Gold price steadies as traders focus on uncertain 2025 rate path
Gold has hit successive records this year and is set to close 2024 more than 25% higher.
Spooked by Federal Reserve’s hawkish stance, hedge funds start liquidating 345 tonnes worth of bullish gold futures positions
Yesterday on the Comex market in New York, gold futures with December delivery dates fell more than $30 an ounce from where it trading just before the Federal Reserve’s interest rate announcement. By the end of the day gold had clawed back some of those losses, but on Thursday the metal was being sold off again.
Late afternoon Thursday gold was exchanging hands for $1,145.10 – down more than 3% from $1,183.50 ahead of the Fed statement and a three week low. Higher interest rates boost the value of the dollar and makes gold less attractive as an investment because the metal is not yield-producing.
While the Fed decided to keep interest rates unchanged it changed the language in the statement to suggest a hike in December is more likely. The market had begun to price in an increase only in March 2016 and gold bulls were forced into a retreat.
The Fed voted 9 to 1 to leave rates in a range of zero and 0.25% where they have been since December 2008. Interest rates in the world’s largest economy has not been raised in more than nine years which played a huge factor in gold’s rise to a record $1,909 in September 2011.
Gold hit its highest level since June 22 a fortnight ago, amid fresh indications that a limp US economy may push a rate hike further into the future, but that narrative now seems to no longer apply.
On the technical front gold is also looking vulnerable.
Hedge funds reduced bullish bets to more than five year lows ahead of the September Fed decision, but the hold on rates then forced a change of thinking with large futures speculators or “managed money” playing catch-up as the sentiment towards gold turned.
Hedge funds built up net long positions – bets that gold will be more expensive in future – for five weeks in a row, tripling holdings over the past month.
Last week the CFTC’s weekly Commitment of Traders data showed net longs now stand at 12.2 million ounces (345 tonnes), the highest since February.
That constituted a huge reversal from July and early August when hedge funds entered net short positions for the first time since at least 2006, when the Commodity Futures Trading Commission first began tracking the data.
Ole Hansen, head of commodity strategy at Danish bank Saxo says after yesterday’s abrupt reversal the price of gold has so far managed to stay above the next level of support at $1,148 an ounce (only just), but “failure to hold this level would attract some additional long liquidation as a break below $1,140 an ounce could signal a reversal of sentiment”:
Source: Saxo Bank
5 Comments
Swiss Freiherr
Gold Price Manipulation So Obvious Its Being Predicted Days In Advance.
johnrolce
hey will not raise interest rates in December. It is the last bluff.
eZeeGold
A smack down by the manipulator and followed by the herd to unload just after they have made some longs. Successful bear raid you might say, but It’s mostly trade of virtual gold. I look forward to see how much physical if any left the registered stock this time. I also notice at the same time there is a pattern clearly supporting it by the manipulators too with bids at just after 08:00 NYtime. Because they know if the price goes too low the physicals will be quickly taken up by the eastern buyers.
therooster
Higher interest rates on debt creates a vacuum for liquidity that gold can fulfill in a currency role. This , of course sees gold as a currency for circulation to hold up economic activity while debt is SAFELY removed .
Most have still not moved on from the viewpoint that gold is a store of value , hedge or investment where gold doesn’t move. SAD ! That static role for bullion has no economic benefit. The value is in bullion’s movement to grease the wheels of trade.
We need liquidity and the kind that has no debt attached.
Just add assets and stir …. gently. What emerges is a liquidity “yin-yang” where debt gets purged based on asset based circulation of bullion based currency.
It is light that comes out of darkness in the process of creation. Nothing new.
rayban
Who or whom is buying and whom is selling ? OK , short term traders sell becaquse they have higher capital costs or they see some better in some other investment . Me , I see economies heading lower just exactly when we need them headed higher . Lower slower growth followed by interest rates rising . Equals fear ? Fear sells Gold and I buy on Bull market and on fear both .
Pent up demqand is getting weaker , subprime is sneaking back in , sales are seeing inflation and a lack of wage sources . We have a lot of money seeking to little wages . Plenty of money , not enough wages to pay those loan payments . This is why QE and such gets less effective the more you use . Gold has a great future , look back at Golds short term bulls of past and see that now it holds it’s own much better . Every recession Gold gets a little stronger and the bull markets run gets longer .
I am always bidding Gold , always bidding Silver and always shall . I see no good economic news of importance currently and a twisted up knot of policies with a bad meeting at the train station . Powder keg of the world building up and waiting for an ignition source . Sure some good news , the bad news is bigger though .