Gold Volumes Shrink on Steady Prices as Traders Look to 2016

  • Gold to fluctuate in $1,060 to $1,078/oz range: CMC Markets
  • Holdings in ETPs extend decline to near the lowest since 2009

Gold trading volumes shrunk in New York and prices were little changed as traders shifted their focus to the outlook for 2016.

Aggregate volume for gold futures has been below the 30-day average since mid-December, when the Federal Reserve raised U.S. interest rates for the first time in almost a decade. Prices had already been heading for a third straight annual loss on the outlook for higher rates, which cut the appeal of the metal as a store of value.

While the metal briefly rallied amid the Paris attacks, investors have mostly ignored bullion this year as the dollar climbed. Now, traders are focusing on how quickly Fed policy makers will continue to raise rates in 2016.

“Prices spent most of the year under significant pressure, shrugging off geopolitical risks and was met face-to-face with the first interest rate hike in 9 years along with an unprecedented move in the dollar,” Phil Streible, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “I do think the recovery is still limited.”

Gold futures for February delivery slid less than 0.1 percent to settle at $1,068 an ounce at 1:44 p.m. on the Comex in New York. Trading was about 43 percent below the 100-day average for this time, data compiled by Bloomberg show.

While HSBC Holdings Plc predicts just two rate increases next year, Goldman Sachs Group Inc. is among banks that see four. Marc Faber, the publisher of the Gloom, Boom & Doom Report, said the U.S. is at the start of an economic recession and U.S. stocks will fall in 2016, clashing with Yellen’s view that things are improving.

“One of the key variables for markets next year will be the extent of what happens to the U.S. dollar,” Ric Spooner, chief analyst at CMC Markets in Sydney, said by phone on Tuesday. Trading will be muted this week and prices will move within a range of $1,060 to $1,078 an ounce, he said.

Investors sold from gold-backed funds for a fifth day. Holdings in exchange-traded products fell to 1,465.6 metric tons on Monday, data compiled by Bloomberg show. Assets are near the lowest since 2009.

Silver futures for March delivery climbed 0.3 percent to $13.928 an ounce on the Comex. On the New York Mercantile Exchange, platinum futures for April delivery rose 1.1 percent to $892.20 an ounce, and palladium futures for March delivery increased 0.8 percent to $556.35 an ounce.

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