Gold prices marked a modest gain on Tuesday, enough to notch their highest finish in five months, finding some support on a weaker dollar ahead of a monetary policy update this week from the Federal Reserve. The price of the precious metal ignored the good US housing data from November and kept the uptrend during the day.
Gold with delivery on February on Comex edged up by 1.80 USD, or 0.1%, to settle at 1,253.60 USD per ounce, which is the highest level since July 10. The contract has gained about 2.2% month to date. The SPDR Gold Shares ETF GLD is traded up by 0.2% on Tuesday dealings, expanding its month-to-date gain to 2.3%.
Markets are getting set for the FOMC outcome that started its two-day meeting on Tuesday. The greenback has fluctuated in a wide range around the level of 97, depending on sentiment for the Fed and the condition of risk appetite, but the general consensus is that the Fed will be making policy even more data dependent.
The Fed is expected to raise the target range for Fed funds to 2.25%-2.50%. For Tuesday, the US dollar index was down around the gold settlement but managed to attract a bid again to the around the level of 97, which was an initial weight on gold.
Still, gold, considered a safe investment during times of financial, economic and political stress around the globe, is up some 7% from 19-month lows hit in mid-August. The precious metal is on track to post its best quarter since March 2017.
Silver price and analysis
The futures on silver with delivery in March fell by 5.8 cents, or 0.4%, to 14.701 USD per ounce.
Recently, silver has been consolidating between 14 USD below and 15 USD above, with the 50 day EMA offering a bit of support as well.
If the Federal Reserve looks likely to continue to hike interest rates next year, then it’s likely that silver will roll over. However, if we break above the 15 USD level, and we get a more dovish statement out of Jerome Powell, then it’s likely that silver will continue to go higher, reaching towards the 16 USD level, perhaps even higher than that.
Ultimately, this is a market that’s waiting for some type of direction from the Federal Reserve on Wednesday, so between now and then would not expect much in the way of momentum.
Palladium vs Platinum price and analysis
The futures on palladium with March delivery lost 0.2% to 1,179.20 USD per ounce. Its record in recent sessions on expectations of higher demand from the automotive sector leaves the contract up 3.3% so far in December.
The platinum with January delivery slipped by 0.1% to 794.80 USD per ounce.
Platinum is likely to start spreading its wings in 2019, while sister metal palladium is expected to continue flying high although it may descend to a slightly lower elevation, analysts say. Palladium is expected to remain in a deficit in 2019 and has the strongest supply/demand fundamentals.
In the near term, we might see some profit taking given that speculative bullish positioning remains quite high. So we would expect to see a correction in the near term. But supply pressures are going to remain.
Standard Chartered looks for palladium to end 2019 at 1,100 USD per ounce and average 1,058 USD for the full year. ABN AMRO listed an average forecast of 1,056 USD per ounce for next year, with a high of 1,125 USD in the first quarter, falling to 1,000 USD by the fourth. Natixis listed a full-year average forecast of 1,015 USD. Commerzbank and Capital Economics both predicted a pullback to around 1,000 USD in the first half of the year on ideas that auto demand has either hit a plateau or will ease.
Standard Chartered looks for platinum to rise to an average of 930 USD for full-year 2019 and end next year around 960 USD. The bank looks for the supply/demand surplus to fall from 406,000 ounces in 2018 to 253,000 ounces in 2019.