Monday, January 20th 01:47 PM IST

Gold still range bound as investor sentiments still weak: Barclays

# gold  # US Federal Reserve  # Gold ETF  # US dollar  

Forex market developments and investor inflow sentiments are netural. Physically backed Gold ETFs infows rose 7.4 tons on Friday driven by SPDR Gold Trust. It was the first inflow in almost a month and the largest daily inflow since 31 January. However, month to date flows are still negative.

LONDON (Bullion Street): Gold continues to trade in a narrow range despite the emergence of some positive factors including modest gains in speculative positioning and largest daily inflows in exchange traded funds (ETF) seen on Friday, according to Barclays Research.

Strong China demand is providing support but it may not last much beyond the Lunar New year while strong start to coin sales provides some optimism.

Price forecasts:Q1 2014:$1220/oz, 2014: $1205/oz.

Macro environment remains neutral and US Federal Reserve may be tracking developments in inflation in 2014 rather than employment to decide on interest rates and tapering.

"Given that gold’s single day price moves are highly correlated with Fed announcements, a change in the Fed’s reaction function away from employment data would make inflation expectations a more important factor for gold," Barclays said.

Forex market developments and investor inflow sentiments are netural. Physically backed Gold ETFs infows rose 7.4 tons on Friday driven by SPDR Gold Trust. It was the first inflow in almost a month and the largest daily inflow since 31 January. However, month to date flows are still negative. 

Long positions in Gold are rising incomex-gross long are at their highest since early November but sentiment towards gold remains weak.

"We do not expect the lifting of Iran’s sanctions to unveil pent-up investment or jewellery demand in the current environment and view the demand sensitivity across India and China as being more influential for the market balance. Iran has not reported its official gold holdings since the mid-1990s and it consumes less than 30 tonnes in fabrication demand, at about 1 % of total demand," Barclays said.

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