Busy news and economic calendar could drive gold prices this week

Goldhub blog

Busy news and economic calendar could drive gold prices this week

Adam Perlaky
Adam Perlaky
Manager of Investment Research
World Gold Council

Posted:

Gold prices:

  • Gold fell last week (XAU -1.2%, LBMA -1.4%) as the stock market rallied and yields rose the most in six years.
  • Gold fell back to the important level of ~$1,500 which could act as support in the interim.

 

Potential gold price drivers this week:

  • Oil had the largest intraday move in history last evening following the Saudi Arabia oil field bombing which impacts 5% of the global oil supply; this has gold bid with concerns about potential retaliatory actions.
  • Rate decisions from the FOMC, BOE and BOJ could drive gold prices; US markets are pricing in 25bps cut.
  • Markets will continue to weigh news out of the UK where PM Boris Johnson is expected to meet with EU officials on Brexit.
  • Quadruple-witching in the US on Friday, when expiration on futures and options on indices and stocks occur on the same day; this is often met with increased volatility and volumes.

 

 

Liquidity:

  • COMEX net longs fell sharply from 1,134t to 963t, still near all-time highs and well above long-term averages as the price of gold fell for a second week in a row.
  • Gold trading volumes also fell sharply last week as we received some late August OTC data; levels went from $238bn a day to $209bn a day; this remains 83% above the 2018 average. 

 

COMEX Net Longs

Source: CFTC, Bloomberg

 

Gold-backed ETF Flows:

  • $760mn worth of outflows globally last week mainly coming from the US (-$610mn) and Europe (-$178mn). Other regions had minimal flows.
  • Flows are mostly flat for the month (+$187mn) with all-regions except Europe with small inflows.

 

Gold-backed ETF flows last week

 

Source: Bloomberg, World Gold Council

 

Options and volatility:

  • $2.8tn worth of gold futures option open interest at the $1,500 strike over the next two months; many multiples higher than traditional amounts. $2tn at $1,550 and $2.4tn at $1,600 which was added last week.
  • Implied and realized volatility both fell last week as gold hovers around $1,500.
  • Call skew increased near the one-year highs as investors likely added to bullish bets following the pullback.
  • Put skew increased sharply as investors began to buy downside protection.

Copyright and other rights

© 2019 World Gold Council. All rights reserved. World Gold Council and the Circle device are trademarks of the World Gold Council or its affiliates.

All references to LBMA Gold Price are used with the permission of ICE Benchmark Administration Limited and have been provided for informational purposes only. ICE Benchmark Administration Limited accepts no liability or responsibility for the accuracy of the prices or the underlying product to which the prices may be referenced. Other third-party content, including Metals Focus, is the intellectual property of the respective third party and all rights are reserved to them. World Gold Council is affiliated with Metals Focus. 

Reproduction or redistribution of any of this information is expressly prohibited without the prior written consent of World Gold Council or the appropriate copyright owners, except as specifically provided below.

The use of the statistics in this information is permitted for the purposes of review and commentary (including media commentary) in line with fair industry practice, subject to the following two pre-conditions: (i) only limited extracts of data or analysis be used; and (ii) any and all use of these statistics is accompanied by a citation to World Gold Council and, where appropriate,  to Metals Focus, Refinitiv GFMS or other identified third-party source, as  their source. 

World Gold Council does not guarantee the accuracy or completeness of any information. World Gold Council does not accept responsibility for any losses or damages arising directly or indirectly from the use of this information.

This information is not a recommendation or an offer for the purchase or sale of gold, any gold-related products or services or any other products, services, securities or financial instruments (collectively, “Services”). Investors should discuss their individual circumstances with their appropriate investment professionals before making any decision regarding any Services or investments.

This information contains forward-looking statements, such as statements which use the words “believes”, “expects”, “may”, or “suggests”, or similar terminology, which are based on current expectations and are subject to change. Forward-looking statements involve a number of risks and uncertainties. There can be no assurance that any forward-looking statements will be achieved. We assume no responsibility for updating any forward-looking statements.

Rate this content: