Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Bearish in Short Term Outlook as Fed Meeting Looms

Commodities / Gold and Silver 2013 Jan 29, 2013 - 04:04 PM GMT

By: Ben_Traynor

Commodities

WHOLESALE Gold Bullion prices climbed back above $1660 an ounce Tuesday morning, broadly in line with where they ended last week, as stocks and commodities fell slightly and the Dollar ticked higher against the Euro ahead of tomorrow's interest rate decision from the US Federal Reserve.

"We are seeing a technical rebound following a few days of price decline," one trader in Shanghai told newswire Reuters this morning.


"In the short run, gold is still going to drift without much conviction, though over the longer term it is still facing very heavy pressure on the upside."

"We have neutralized our medium term forecast and also now have a short term bearish outlook," says Commerzbank senior technical analyst Axel Rudolph, citing gold's failure to breach its 55-day moving average at $1696 an ounce.

"The $1625.77 level is still key for the medium term trend. Failure here could provoke a sell-off to below the $1600 level."

Like gold, silver regained some ground this morning after losses in recent days, climbing back above $31 an ounce.

Here in London, the FTSE 100 retreated from five-year highs this morning, as other European stock markets also dipped slightly.

In the US, the Federal Open Market Committee begins its two-day meeting today ahead of the Fed's latest policy decision tomorrow.

"This week's FOMC meeting and US non-farm payrolls [on Friday] will be key in setting gold's price trajectory," says a note from Barclays Capital.

"[Minutes from last month's] FOMC meeting [show] that some FOMC members are looking for an exit to further asset purchases before the end of 2013," says the quarterly preview from Standard Bank's commodities desk.

"If the Fed stops its quantitative easing program, it should temper some of the upside for gold and silver – at least in US Dollar terms – relative to an environment where the Fed still expands its balance sheet...but to us, the Fed's balance sheet is only one piece in a bigger puzzle of growing liquidity and negative real interest rates."

The Fed will continue with $85 billion a month of asset purchases – comprising $40 billion of mortgage-backed securities and $45 billion of government bonds – until the first quarter of 2014, by which time it will have bought $1.14 trillion worth, according to the median estimate in a survey of economists conducted by news agency Bloomberg.

"To get to the point where Bernanke would be comfortable letting up, you have to have a good solid string of economic reports [this year] that you're just not going to get," says Eric Green, global head of rates and FX research at TD Securities in New York.

"The Fed is resuming rapid expansion of the monetary base," says Don Coxe, former strategy advisor at BMO Financial Group, in his final issue of his monthly BMO strategy journal 'Basic Points'.

"Japan will soon be flooding the currency markets with Yen. The European Central Bank remains expansionary...it is almost impossible to conceive of a more bullish long-term backdrop for gold."

Coxe also sees demand from India and China, two countries that account for around half of world gold demand, continuing to support gold prices.

Indian exports of gems and jewelry are expected to rise by 15% this year to more than $44 billion, with silver exports seen jumping 30%, according to Pankaj Kumar Parekh, vice chairman of India's Gems and Jewellery Export Promotion Council.

"At such high prices, gold is going out of budget for many youngsters," says Parekh.

"A wrist bracelet of white gold is now replaced with sterling silver as it is cheaper."

By Ben Traynor
BullionVault.com

Gold price chart, no delay   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.(c) BullionVault 2013

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Ben Traynor Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in