Morning Call: Goldman Sachs Cuts Gold Price Forecast, Sees Potential Peak In Prices; Oil Rises After ADP Jobs Report

The seesaw trading action in commodities continues today, as prices recover from the prior session’s decline. In economic news, payroll processor ADP said that private employers in the U.S. added 118K jobs in November. Analysts expect that the official government report on Friday will show a net job gain of 87K for the month. The slow pace of growth is largely due to impacts from Hurricane Sandy.

In currency markets, the U.S. Dollar Index was last trading up by 0.21 percent to 79.81.

  • Gold is little changed after plunging on Tuesday. The yellow metal was last trading up by $0.68, or 0.04 percent, to $1698.23, while silver shed $0.05, or 0.16 percent, to $32.88.

    Platinum gained $3.74, or 0.24 percent, to $1589.99 and palladium fell by $1, or 0.15 percent, to $681.50.

    Analysts at the respected investment bank Goldman Sachs cut their 12-month forecast for gold by 7 percent to $1800. They see the metal averaging $1750 in 2014.

    “While we see potential for higher gold prices in early 2013, we see growing downside risks. As a result, we find that the risk-reward of holding a long gold position is diminishing,” the bank said.

    “Our expanded modeling suggests that the improving U.S. growth outlook will outweigh further Fed balance sheet expansion and that the cycle in gold prices will likely turn in 2013,” it added.
    Goldman Sachs cuts gold outlook, sees growing risk

  • Crude oil is rising ahead of the EIA’s oil inventory figures. Brent was last trading up by $0.45, or 0.41 percent, to $110.29, while WTI gains $0.11, or 0.12 percent, to $88.61. The less-authoritative API report showed that crude inventories fell by 2.2 mmbbl, gasoline inventories rose by 5.7 mmbbl, and distillate inventories rose by 1.1 mmbbl last week.

    “We believe that crude oil will continue trading in line with the overall risk sentiment, as London’s spot prices are stuck in the late-November range and as attention is likely to turn back to the U.S. economy from Friday when the U.S. jobs report for November is released,” Andrey Kryuchenkov, commodity analyst at VTB Capital, said.
    Oil futures rise ahead of EIA report

  • Natural gas was last trading up by $0.07, or 1.84 percent, to $3.60/mmbtu. However, weather remains a drag. “December, at least for the first three weeks, is still looking pretty mild,” said Bob Haas, meteorologist with MDA Weather Service.
    PIRA Energy Group’s weekly natural gas, power and coal market recap

  • Grains are up, as corn trades fractionally higher to $7.46/bushel, while soybeans rises by $0.07, or 0.48 percent, to $14.63, and wheat rises by $0.03, or 0.39 percent, to $8.42.
    Futures are steady to mixed in early trade

  • Copper was last trading up by $0.01, or 0.39 percent, to $3.65/lb on Comex.
    Freeport-McMoran copper reportedly moving into energy, sending shares soaring

What to Watch For:

8:15 a.m. ET: ADP Employment Change (November)

10:00 a.m. ET: Factory Orders (October)

10:00 a.m. ET: ISM Non-Manufacturing Composite (November)


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The Art&Science of Trading Gold
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