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Ready, Steady, Gold: Tight Range Has Gold In 'Sleep Mode'

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Ready, Steady, Gold: Tight Range Has Gold In 'Sleep Mode'

(Kitco News) - A tight price range has dominated gold this past month and a lack of movement has analysts weighing in.

The yellow metal has been trading within a range of 3.3% for over a month, Bloomberg reported, adding that it represents the tightest range since February 2013.

“It really is very quiet, to say the least,” David Govett, head of precious metals trading at Marex Spectron Group Ltd. in London, told Bloomberg on Monday. “We’re stuck between $1,260 and $1,300 and have been for a month now and I really don’t see that changing without something dramatic happening elsewhere. Looks like the market has gone into sleep mode.”

On top of that, volatility has been at its lowest level in seven years.

This calmness within the gold market has got some analysts reversing their bullish positions to neutral when making projections for next year.

UBS strategist Joni Teves, said in her 2018 forecast that gold will average $1,285, with no near-term catalyst powerful enough to move prices significantly higher or lower.

“It becomes difficult to justify a strong rally in gold prices. Yet, we don’t think there is a compelling reason for a sell-off either. Our assessment of the global macro landscape is instead more consistent with gold prices that are likely to be well-supported, yet capped at the same time,” Teves said in a note last week.

Yet, gold is still a prime asset for investors who are looking to diversify their portfolios.

“Growth dynamics are improving, and, although the momentum this year is unlikely to be replicated in 2018, growth is likely to remain steady,” Teves said.

Aside from this past month, 2017 has been a positive year for gold, with prices gaining around 12% so far.

In recent news, gold rebounded after falling $9 in eight minutes on Friday.

“Last Friday’s quick drop in gold prices began in the futures market, when a likely very large sell order hit hard a lackadaisical trading affair up to that point,” said Kitco’s senior technical analyst Jim Wyckoff.

December Comex gold was last seen trading at $1,278.00, down 0.07% on the day.

 

Some analysts remain optimistic that the bull market is coming. “Gold remains in consolidation as it continues to try and hold support and build a great bottom. This level has held since June and shows no signs of giving way, further proving the bear market is over,” said Todd Horwitz, chief market strategist of BubbaTrading.com.

“The flop in the new tax plan will only help the price of gold. The one concern could be higher interest rates; however, most investors have chosen to ignore interest rates and the dollar, realizing that the central banks simply manipulate them,” Horwitz added.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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