Gold prices closed with a more than 1% gain last Friday. Gold for December delivery rose $15.10, or 1.1%, to settle at $1,339.20 an ounce on the Comex division of the New York Mercantile Exchange. That was the highest settlement since September 19. Gold prices finished 0.5% higher on weekly basis.
There are a few reasons why prices would likely rise in the coming week. The split views of the varied Federal Reserve governors on monetary policy suggest that uncertainty remains, which suggest traders will most likely have a bullish sentiment.
Gold could also find safe-haven demand if next week’s US nonfarm payrolls report comes out disappointing. In addition, gold could find more safe-haven demand amid the fiscal brinkmanship going on in the U.S. Congress.
On the other hand, bearish sentiment is still high and the ‘fundamental’ case presented by most analysts is bearish. Gold is a currency and with world currencies all being devalued and the fact they are essentially nothing more than paper is enough of a reason to be accumulating gold and to remain constructive.
However, gold prices should be supported by the U.S. debt-ceiling negotiations coming in October. While the debt ceiling will almost certainly be resolved before or soon after the deadline, the risk is that politicians will again kick the can down the road and not address the fundamental fiscal challenges facing the U.S. Gold surged to record intraday highs over $1,900 an ounce after the last debt-ceiling debacle in 2011.
The ICE dollar index, which charts the dollar against a basket of six major currencies, showed the U.S. currency sliding south on Friday, last trading around 80.273 from 80.535 late Thursday. A weaker dollar often buoys prices for dollar-denominated commodities.
Elsewhere, markets in China will be closed next week for the National Day Golden Week holidays. This will prevent prospective gold buyers in the world’s second-largest gold market from making purchases.
India, the world’s top gold importer, resumed gold buying after a two-month pause after the government and banks arrived at a consensus on how new import rules should work.