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Gold Extends Losses ahead of Fed’s Policy Meeting
 

Gold

Spot gold was down 0.4 percent at $1,241.87 per ounce, falling sharply for two weeks in a row as the Fed is expected to lift rates at its two-day policy meeting ending on Wednesday. Investors sold off bullion as market participants worried about rising risk appetite triggered by U.S. tax overhaul would drain funds from safe-haven products. Recent high-risk geopolitical tensions failed to provide a floor to prices, fueling panic sentiment.

We believe that the downward momentum is not sustainable, while following recovery can hardly be slow. First, the turnover in U.S. stock market kept falling as investors were overreacting to the hypothesis that tax overhaul attracted most capital. Second, technical factors did not support a further downpath as $1,200 provide a solid support that can hardly be breached below. Gold is quite likely to steady and reverse the course after it reaches the Fibonacci support and an interest rate hike from the U.S. was fully priced in.

Silver

Silver was down 0.5 percent at $15.71, posing a free fall in the past two weeks. Extending a downpath on chart in tandem to that of in September, the white metal reached a key support with no further downward momentum, suggesting a good entry point for bargain hunting. Compared with bullion, silver’s losses were relatively limited, keeping an arm’s strength from previous lows. That means that silver may have hit bottom.

 
Dealing Room, ICBC Beijing Branch
                       Zhao Yifei

                                  
Note: The information herein is provided for informational purpose only. You are liable for the risk incurred to the investments based on this information provided herein. 


(2017-12-12)
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