The African Standard bank released its daily commodities analysis and report for September 30th. The markets were “dull” as there was little change due to the lack of direction because of the anticipated U.S. debt ceiling and Fed policy resolve.
This week should be a busy one. There are several economic data due to be released; the U.S. non-farm Payroll as a signal of the U.S. tapering plans is supposed to be announced this Friday unless the U.S. government shutdown.
Gold should benefit from the market uncertainty and the waning real interest rates. Inflation and U.S. government bond yields both affect the real interest rates, and the nominal interest rates are still low.
Gold price found strong resistance between $1,340 and $1,349 levels on attempts to rally. It is expected for the gold market to remain quite for some time in anticipation of the Fed’s tapering. Another reason is the awaited U.S. non-farm payroll data due to be released on Friday.
Industrial precious metals prices (Platinum and Palladium) are expected to be seen lower and gold to be higher as the uncertainty in markets continues. The uncertainty centers on failure to find a suitable solution to cut government spending. U.S. government shutdown means automatically cutting unnecessary spending for a period of time starting October 1st unless a solution is found. The deadline might extends to October 17th, as the U.S. Treasury stated earlier their ability to fund spending till that day.
Physical demand might start failing if gold price approaches $1,400 per ounce. Therefore, if the U.S. government came to an agreement on spending, gold price might give up gains from the current uncertainty.
The gold market expected the Feds to announce the start of tapering the current monetary policy this month. The question among the market participants and analysts was about the rate of tapering and how much the Fed will taper. The FOMC surprised the world by delaying the tapering to unnamed time till the U.S. market generates better and sustainable economic signals.
COMEX gold future for December delivery settlement was at $1,337.00, DGCX gold future for October delivery was at $1,336.30, CBOT gold for December delivery at $1,338.70 and TOCOM gold for June delivery was at ¥4,214 per gram.
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