Market Overview: Gold futures on Bursa Malaysia Derivatives are expected to enter a consolidation phase next week, influenced by upcoming U.S. economic data releases, according to analyst Stephen Innes from SPI Asset Management.
Current Sentiment: The market maintains a bullish outlook on gold due to a weaker U.S. dollar, primarily driven by the Federal Reserve’s ongoing rate cut cycle. However, Innes notes that momentum may be slowing as strong U.S. economic data suggests that the market might be overestimating future rate cuts, which could impact gold prices negatively.
China’s Impact: Recent data indicates that China’s August net gold imports via Hong Kong hit a two-year low, reflecting local sellers’ expectations of muted demand. This trend could be linked to the Chinese government’s stimulus measures, which have strengthened the yuan, reducing the necessity for retail investors to hedge against currency weakness by purchasing gold.
Price Movement: On a Friday-to-Friday basis, the spot price for September 2024 rose to $2,661.60 per troy ounce from $2,614.20. Other future contracts, including October through April 2025, also saw increases, with October settling at $2,675.10.
Trading Activity: Trading volume rose to 117 lots, up from 82 the previous week, while open interest increased to 71 contracts from 44. The physical gold price was recorded at $2,663.75 per troy ounce as of September 26, according to the London Bullion Market Association.
Conclusion
As the gold market braces for critical economic data, traders are likely to adopt a cautious stance, with consolidation expected in the near term. The interplay between U.S. economic indicators and Chinese demand will be pivotal in shaping future price movements.
