Gold futures edged up Friday morning and looked likely to post a weekly gain but the metal has thus far failed to score a big boost from Federal Reserve policy that signals a lower-for-longer path for interest rates for the next three to four years.
“Bullion is waiting for new market drivers, as investors seem to have fully priced in the current scenario and the hyper-expansive monetary policies of central banks,” wrote Carlo Alberto De Casa, chief analyst at ActivTrades in a research note on Friday.
December gold was gaining $7.40, or 0.4%, to trade at $1,957.40 an ounce, following a 1.1% slide on Thursday.
December silver added 10 cents, or 0.4% to trade around $27.19 an ounce, following a 1.4% drop in the previous session.
“The gold price is little changed, continuing the slow dance seen in the last few days around $1,950,” De Casa wrote.
For the week, gold is looking at a weekly gain of 0.4% and silver futures are on pace for a 1.2% advance over the five-session period, according to FactSet data.
Monetary policy changes were expected to hold a potential fresh catalyst for gold and silver but the precious metal has failed to see a spark from the Federal Reserve’s decision on Wednesday to keep its policy interest rate near zero at least through the end of 2023 to help the economy recover from the coronavirus pandemic. The Fed’s forecasts for 2023, released for the first time, also show the rate staying near zero from now until at least 2024.
Indeed, trade for both gold and silver has been mostly range-bound since a burst higher back in July, fostering some concerns that the bullish trend for the precious metals, which has been supported by the economic uncertainty created by the COVID-19 pandemic, may be losing some steam.
Some strategists argue that price moves for gold and silver off central bank news were already factored as they have been mostly telegraphed by the likes of the Fed and other global monetary policy makers.
Bullish investors may view this consolidation period as a precursor to another fresh assault above $2,000 for bullion. Some bullish traders see this as a consolidation pattern before gold and silver surge to new high.
A note from technical analysts at SentimenTrader indicates that there is some bearish patterns forming in metals that usually are followed by a retreat in prices, but the analysts at the research platform acknowledge there is nothing definitive about the outlook for the commodities in recent trade.
“After a spike in July, precious metals have calmed down and mostly swung sideways,” wrote the SentimenTrader analysts. “Some bullish traders see this as a consolidation pattern before gold and silver surge to new highs,” they said.