Gold retrenches amid signs of weakening bearish sentiment

Aug 4, 2015 - 7:54 PM GMT

Gold prices rose during Tuesday’s US trading session on evidence that physical demand is picking-up.

Gold for December delivery on the Comex division of the New York Mercantile Exchange increased $1.30 to settle at $1,090.70 per ounce. Trade ranged from $1,080.20 to $1,094.40.

“Whilst the market is short (and could get shorter) there is a feeling that the commodity sector is entering the final phase of this bear market – price moves are driving supply shifts and the moves are well documented – the beaten up mining sector may begin to see long term investment money coming in at these levels,” Triland Metals said.

Physical demand has been lacking recently, but Triland said that fresh data could be a signal that the downward trend is easing.

“Some noticeable tightness has emerged in the nearby gold market which is often a simple sign that there is physical interest around; this ties in neatly with the flows being claimed by some of the larger bullion banks and should be supportive of price action,” Triland Metals added.

Investors will probably remain on the sidelines until Friday’s US employment report is released. Last week, gold net short positions increased eight percent to a new record high of 14,600.

Currently projected at 220,000 jobs added in July, down from 223,000 in June, the non-farm employment change will be a key indicator for the market and the Federal Reserve ahead of the latter’s much anticipated September meeting.

A moderation in job creation would counter the recent claim by the Fed that the labour market is seeing “some” growth in past few months after a harsh winter slowed the US economy.

In US data, factory orders month-over-month in June was in-line with forecasts at a 1.8 percent gain, while IBD/TIPP Economic optimism in August came in at 46.9 percent, off the 48 percent estimate.

Meanwhile in equities, the Dow Jones industrial average and S&P were down 0.2 percent and 0.1 percent respectively, the dollar was 0.5 percent stronger at $1.097 against the euro.

As for other precious metals, Comex silver for September delivery rose less than one cent to 14.520 per ounce. Trade has ranged $14.345 to $14.625.

Platinum for October settlement fell $13.70 to $953.40 per ounce, while the most actively traded palladium contract was at $594.50 per ounce, down $8.70.