Gold Futures Contract Expected to Trade in Consolidation Mode Ahead of US Economic Data Release

Strategic Insights -

The gold futures contract on Bursa Malaysia Derivatives is likely to trade in consolidation mode next week as market participants await the release of United States economic data, according to SPI Asset Management managing director Stephen Innes. Despite the weakening US dollar, driven by the US Federal Reserve's ongoing rate cut cycle, Innes expects momentum to slow down as US economic data continues to hold up, potentially causing gold prices to adjust. Additionally, China's reduced demand for gold imports via Hong Kong, attributed to the government's stimulus efforts and strengthened local currency, may further contribute to a consolidation in gold prices.

Key Takeaways:

  • The gold futures contract on Bursa Malaysia Derivatives is expected to trade in consolidation mode next week ahead of the release of US economic data.
  • The market narrative remains bullish on gold due to the weaker US dollar, driven by the US Federal Reserve's ongoing rate cut cycle.
  • However, SPI Asset Management managing director Stephen Innes expects momentum to slow down as US economic data continues to hold up, potentially causing gold prices to adjust.
  • China's reduced demand for gold imports via Hong Kong, attributed to the government's stimulus efforts and strengthened local currency, is also likely to contribute to a consolidation in gold prices.
  • On a Friday-to-Friday basis, spot month September 2024 rose to $2,661.60 per troy ounce, while other month contracts also settled higher.
  • Volume increased to 117 lots from 82 last week, and open interest widened to 71 contracts from 44 previously.
  • The price of physical gold stood at $2,663.75 per troy ounce, according to the London Bullion Market Association's afternoon fix on Sept 26.

Statistics:

  • US economic data release: Not specified
  • US Federal Reserve rate cut cycle: Ongoing since [date not specified]
  • US dollar index: Weaker due to rate cut cycle
  • Gold prices: $2,661.60 (spot month September 2024) and $2,675.10 (other month contracts)
  • Volume: 117 lots (from 82 last week)
  • Open interest: 71 contracts (from 44 previously)
  • Physical gold price: $2,663.75 per troy ounce (as of Sept 26)

Sources:

  • Bernama website, news release
  • SPI Asset Management, managing director Stephen Innes (comment to Bernama)