Month: October 2013

London Gold Market Report
from Adrian Ash
BullionVault
Weds 30 Oct 09:55 EST

BOTH gold and silver rose Wednesday lunchtime in London, as the day’s widely-expected “no change” decision from the US Federal Reserve was preceded by weak US data.

 The private-sector ADP Payrolls report said the US economy added only 130,000 jobs last month, rather than the 150,000 analysts forecast.

 US inflation also lagged consensus forecasts, as did Germany’s consumer price index, which showed a 0.2% fall this month from September.

Gold added 0.5% to $1358 per ounce. Silver prices gained 1.4% to break above $23 per ounce for the first time in 6 weeks.

“We are concerned that the ugly truth is that money printing remains the major prop keeping the global economy from toppling over,” says John Chatfeild-Roberts, part of the multi-manager Merlin team at UK fund giant Jupiter.

 Underperforming their benchmarks in 2013 thanks to the falling gold price, Merlin’s managers warn that quantitative easing “[may] be enough to tide us over until the buttressing effect of sustainable economic growth emerges.

 “[But] the alternative scenario helps to explain why gold remains of value in what appears to be a precarious future.”

 “The global economy,” writes Marcus Grubb, director at market-development organization the World Gold Council in its latest Gold Investor report, “has come a long way since the 2008-2009 financial crisis and its aftermath.”

 But with growth weak and financial markets volatile, investors “[should] apply the single most important lesson learned during the Great Recession: risk management matters.”

 Advising that gold remains integral to long-term investor holdings, Grubb’s team go on to explain “why a 2% to 10% allocation to gold in well-diversified portfolios makes sense.”

 Over in Asia on Wednesday, Hong Kong-based jewelry retailer Chow Tai Fook – one of China’s largest gold chains, with 1,850 outlets – said today it expects to report strong growth in half-year sales, sending the company’s stock 3% higher.

 Shanghai gold contracts meantime reversed Tuesday’s $3.50 discount to London prices, ending the day with a $1.50 per ounce premium to that global benchmark.

 More widely in Asia however, “Physical demand in this part of the world has shown some signs of weakening recently,” says a note from AnandRathi Commodities Ltd. in Mumbai.

 Indian premiums on investment gold bars, over and above London benchmarks, today crashed to $70 per ounce “due to weak demand for gold on the domestic market” according to one Mumbai dealer quoted by the Business Standard.

 But other sources continued to put the Mumbai premium at $115 per ounce, and “Still gold is not available,” Reuters today quotes All India Gems & Jewellery Trade director Bachhraj Bamalwa.

 Two days before Dhanteras marks the start of Diwali, the peak gold-buying festival in the world’s No.1 consumer nation, Bamalwa put the premium to London benchmarks at $120-130 per ounce.

 Thanks to 2013’s good monsoon and harvest, “Farmers will have additional disposable income,” explained the World Gold Council’s P.R. Somasundaram, managing director India, earlier this month.

 “As an Indian, the first thing comes in our mind after food is to accumulate some gold. Based on that fact, we estimate a robust quarter for gold this year.”

 2013’s bumper harvest means wheat exports from India – already the world’s No.2 supplier – will rise by one third to new record highs, says Singapore trader Agrocorp.

 India’s food ministry may this week cut the minimum price needed to make wheat exports, says Bloomberg, because the country’s own state reserves are now double what it needs.

 High-spending Indian jewelry buyers are switching however to platinum and diamond pieces, according to a survey from the Associated Chambers of Commerce & Industry.

More than three-quarters of the 350 jewelers surveyed by AssoCham said they have increased their platinum and diamond work, to meet consumer demand hurt by this year’s record-high gold prices and now the shortage of gold forced by the Indian government’s gold imports ban.

Adrian Ash

BullionVault

Gold price chart, no delay | Buy gold online

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can fully allocated bullion already vaulted in your choice of London, New York, Singapore, Toronto or Zurich for just 0.5% commission.

(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.

By George Leong, B.Comm.

With the slew of economic data being released this week, we’re obviously starting to get a better sense of where stocks could be heading over the next few weeks.

Of course, the focus will be on the Federal Reserve meeting today, where it’s really a no-brainer that Federal Reserve Chairman Ben Bernanke will leave his bond buying in place. Now some may argue that it may have been a different outcome if the government impasse didn’t occur, but I doubt that.

The talking points at today’s Federal Reserve meeting? The Federal Reserve will likely talk about how the economy is showing signs of growth, but that it remains fragile and will need to strengthen. The Federal Reserve will also talk about the soft results from the jobs market, and how it also needs to pick up.

The end outcome? A non-response from the Federal Reserve as far as tapering its bond purchases. In fact, based on what is happening, it doesn’t look like any tapering will occur until at least December, but most likely not until Bernanke leaves his post as head of the Federal Reserve in January.

Traders realize the Federal Reserve will keep the flow of money going, which has helped to add support to the stock market. Yet I’m still debating how high stocks can run. The key will be what consumers do during the holiday shopping season that begins in about a month with the critical Black Friday on November 29.

I’m not that optimistic, based on what the retailers said in their September reports. Also, jobs growth continues to be marginal at best, and this will negatively impact consumers’ desire to spend.

The chart of the SPDR S&P Retail Index (NYSEArca/XRT) is showing a possible top and a potential retrenchment to a previous channel in the high 70s range. You may want to consider betting against the retail sector by buying put options or shorting the SPDR S&P Retail Index.

            Chart courtesy of www.StockCharts.com

The end result will be pressure on the fourth-quarter gross domestic product (GDP). We will see what the early signs are when the advance reading for the fourth quarter is reported.

But the impact of the weak jobs growth won’t just affect the retail stocks; it is also likely to impact the housing market. Existing and pending home sales were weaker in September, despite the continued rise in home prices. The NAHB Housing Market Index continues to be dismal, with a reading of 55 in October. This metric indicates the confidence of homebuilders and generally, we see readings in the 80–90 level when confidence is high.

As we move forward, it looks like we will see a lag in the demand for homes and a build-up in inventory levels surfacing that could point to a correction in housing. Given this, you may want to consider buying put options or shorting the SPDR S&P Homebuilders ETF (NYSEArca/XHB), as well, as the chart below suggests a possible downward move, based on my technical analysis.

            Chart courtesy of www.StockCharts.com

The bottom line: jobs growth remains the key to building a healthy economy, and so far, it’s lacking. I would be careful going forward as we move through the holiday season. There’s only so much the Federal Reserve will be able to do going forward.

This article Two Ways to Profit from Lagging Jobs Growth was originally published at Investment Contrarians

USDCHF unexpectedly turned higher in this week back to 0.9000 level but still in the context of a larger bearish trend if we consider the latest structure. We see a five wave fall from above 0.9170 to 0.8888 so current upward reaction could be just a temporary bear market rally. Notice that current recovery is also approaching former wave 4 as well as to 38.2% and 50% retracement area that could react as a strong resistance zone. With that said, new sell-off on this pair may follow soon. Only rise and close above 0.9100 would put bullish price in action. Until then we are bearish.

USDCHF 4h

Written by www.ew-forecast.com

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By Mitchell Clark, B.Comm.

Those interested in the oil business will know that smaller stocks in the sector have mostly been doing very well, even as the spot price of the commodity dropped below $100.00 a barrel.

The run-up has been pronounced in a number of companies, likely in anticipation of third-quarter earnings. Oil stocks advancing on declining spot prices is a very unusual development in the resource sector. But there is definitely an appetite out there among institutional investors for junior oil and natural gas producers.

One company we looked at previously is Kodiak Oil & Gas Corp. (KOG). This Bakken oil play reports tomorrow, and expectations are high.

Wall Street consensus is for Kodiak to generate sales growth of around 150% in its upcoming quarter. Earnings have the potential to double over the third quarter of 2012.

Company management recently announced its full-year 2013 average daily production will be approximately 30,000 barrels of oil equivalent per day (boepd). This compares to an average of 14,000 boepd in 2012. This year’s exit production rate is currently estimated at 42,000 boepd.

So, there’s definitely economic growth in the domestic oil and gas business due to new technology and the willingness of investors to finance junior companies.

Kodiak is trading right at its all-time record high after experiencing a meaningful consolidation throughout 2012 and the first half of this year. The stock is fully priced, which is no surprise. If oil prices were to reaccelerate, this position would be even higher.

Also reporting tomorrow is ConocoPhillips (COP), which is outperforming other big oil companies on the stock market.

ConocoPhillips spun off Phillips 66 (PSX) last year, which was a total gift to shareholders. Phillips 66 has basically doubled since listing (including dividends), and still offers a current yield of 2.5%.

Getting back to smaller producers; if a company like Kodiak delivers with its numbers, there’s no reason at all why the position won’t keep ticking higher.

The selection of high-growth junior producers isn’t that large and one could certainly trade off the momentum.

Triangle Petroleum Corporation (TPLM) is another Bakken play we considered not too long ago. (See “Why the Street Is So Bullish on This Junior Oil Producer.”) This junior producer illustrates the volatility that can be experienced in the operations of a junior oil and gas business. The company has found its stride, and the stock has been soaring.

In terms of portfolio management, I think it’s a worthy risk to have a couple of junior resource picks, perhaps with one in domestic oil and gas and the other in gold/silver.

The wind has been taken out of precious metals stocks due to lower spot prices, but there are some quality junior companies out there with growing production and solid balance sheets.

All resource investing is speculative and mostly for risk-capital investors. Blue chip gold companies like Barrick Gold Corporation (ABX) and Newmont Mining Corporation (NEM) have been hammered by weaker spot prices and higher costs. Everything comes down to the spot price in precious metals investing.

But junior oil and gas stocks are a bright spot, even with prices in consolidation. Expectations certainly are high, but so is the production growth.

This article Oil in Consolidation, but Momentum Remains in Junior Oil & Gas Stocks is originally publish at Profitconfidential

By Michael Lombardi, MBA

While the mainstream media and politicians are telling us the economy is improving…key economic indicators point to a global economy headed the wrong way.

The Baltic Dry Index is an indicator of demand in the global economy. If the Baltic Dry Index is declining, it means the global demand for goods is softening. When you look at the chart below, you’ll see the devastated Baltic Dry Index—the index is saying demand never came back after the credit crisis of 2008.

Chart courtesy of www.StockCharts.com

Another key indicator for growth in the global economy is the major stock Caterpillar Inc. (NYSE/CAT)—a worldwide company involved in the capital goods sector.

Caterpillar is a bellwether stock because it gauges the activity of capital goods companies in the global economy. If these companies are not investing in new projects or upgrading their older equipment, it suggests the companies have a pessimistic forward-looking bias.

Below is a chart I’ve created for my readers that compares Caterpillar’s revenue growth to the growth rate of the world’s gross domestic product (GDP).

Chart copyright Lombardi Publishing Corporation;
Data source: World Bank & NASDAQ web sites, last accessed October 24, 2013.

You can clearly see the relationship between the GDP of the global economy and Caterpillar’s revenue growth—they move very closely in line with each other.

What’s next?

Not long ago, Caterpillar issued its third-quarter corporate earnings. The company’s corporate earnings per share plummeted more than 42% compared to the same quarter a year ago—$1.45 per share compared to $2.54 in the third quarter of 2012. Caterpillar’s revenues plunged more than 18%, coming in at $13.42 billion compared to $16.44 billion in the third quarter of 2012. For fiscal year 2013, the company expects to have revenues of $11.0 billion less than the previous year’s—or 17% lower. (Source: Caterpillar Inc., October 23, 2013.)

When I look at these two key indicators of the global economy, they are very convincing. The global economy is standing on the cusp of an economic slowdown.

Sure, with the easy money policies of the past few years, the momentum for the stock market has been on the upside (“don’t fight the Fed; don’t fight the tape”). But longer-term, companies on key stock indices, many of which earn a significant portion of their revenues from the global economy, will see their stock prices deteriorate as their revenues decline. There will come a point when the “financial engineering” many public companies are engaging in won’t work anymore.

By George Leong, B.Comm.

Twitter Inc. is the most highly anticipated company to debut its initial public offering (IPO) this year as it sells its story to the big institutional investors who are clamoring to buy shares. Of course, there will likely not be a lot of selling needed for its IPO, as the company will garnish immense interest.

Sorry, dear reader, but we are out of luck, yet again. A popular IPO such as Twitter is never offered to small investors. You have to have major bucks and clout with Wall Street to get in on the deal. The way popular IPOs are sold was supposed to change with opportunities given to the small investor, but it hasn’t; so once again, we are shut out as the rich get richer.

You can probably indirectly get a piece of Twitter at the IPO price via investing in funds or exchange-traded funds (ETFs) that will buy into Twitter at its IPO price. The funds buying will eventually become clearer, but a possible ETF is the Global X Social Media Index ETF (NYSEArca/SOCL), which invests in brand-name social media stocks from around the world.

Based on what we have seen so far this year, technology IPOs are hot and you can expect Twitter to likely double up on its first day from its expected subscribed IPO price of between $17.00 and $20.00 sometime in early to mid-November.

For the average investor, the hope will be that Twitter copies Facebook, Inc. (NASDAQ/FB) in its first day of trading, but I doubt that. (Read “The Plentiful Opportunities I Still See in the Social Media Sector.”) Recall that Facebook opened at $42.05 and traded as high as $45.00 on its first IPO day, prior to settling at $38.23 on May 18, 2012. The stock subsequently plummeted to the $18.00 level, but has since recovered to the current $51.00 range.

Now, I’m not saying that Twitter will have the same fate, but it’s OK to dream, right? Of course, if Twitter does decline or trades lower than say $30.00, then I would consider taking a closer look.

Twitter doesn’t make tons of revenues or profits yet. Just like Facebook, Twitter will need to monetize its growing list of tweeters, which pundits estimate to be in the 500 million range. Once the first day for the IPO is over and the frenzy begins to die down, Twitter will just then become another social media company with great potential, but needing to deliver numbers to investors.

Management at Twitter only have to look at stocks like Facebook and Groupon, Inc. (NASDAQ/GRPN) to understand that the company needs to pry money away from its tweeters in order to satisfy Wall Street. Facebook is doing it now with its surging mobile advertising business. For Twitter, the company will likely have to follow a similar approach like Facebook and focus on generating advertising money, which will determine its ultimate success. For now, I’d keep an eye on Twitter.

This article How Small Investors Can Still Get a Piece of Twitter is originally publish at Profitconfidential

By Sasha Cekerevac, BA

Whenever I’m asked what I think has the biggest potential impact not only on the stock market, but also on our way of life, I always point to the continued increase in government debt.

Over the short term, the Federal Reserve has attempted to stimulate the economy partially by buying U.S. Treasuries. Under normal monetary policy, the Federal Reserve only directly impacts short-term interest rates. To reduce long-term interest rates, the Fed began buying U.S. Treasuries, pushing up the price and lowering the yield.

Over the short term, we can look around today and notice that the sky is not falling. However, as government debt continues to pile on, approaching $17.0 trillion (which doesn’t include unfunded liabilities), at some point, this will impact not only U.S. Treasuries, but also our entire economy.

Part of the reason that U.S. Treasuries are still in demand worldwide is that the U.S. dollar remains a reserve currency. There are benefits from a logistical standpoint in conducting business using the reserve currency to also use U.S. Treasuries for investment purposes.

However, as I’ve mentioned in other articles, large investors in U.S. Treasuries, such as China, are increasingly calling for a new global financial system that relies less on the U.S. dollar.

That sentiment alone should shock the politicians into action and make them realize that our biggest lenders, the ones buying our U.S. Treasuries, are questioning our ability to manage the rising pile of government debt.

The most recent data from August was that China actually reduced its holdings in U.S. Treasuries to a six-month low, according to the U.S. Department of the Treasury. (Source: “Major Foreign Holders of Treasury Securities,” U.S. Department of the Treasury, October 22, 2013.)

China still remains the biggest holder of U.S. Treasuries, and our continued accumulation of government debt certainly must be a worry to not only China, but the rest of the world, as well. After all, as the reserve currency and leading economic power, how we run our economy will make an impression on the rest of the world. The way we’re going now, it appears we’re running our economy into the ground.

Is this reduction in U.S. Treasuries by China just a temporary blip or will foreign investors once again begin buying up our government debt going forward?

Over the short term, these types of variables are difficult to predict. As I said before, we are lucky that the rest of the world is in such a mess. However, that is no excuse for continuing to add on ever-increasing levels of government debt.

Look, we can’t be hypocritical and look down our noses at nations like Greece, which also ran up its level of government debt until it was unsustainable. While we are obviously much stronger as a nation, we are nevertheless on the same path.

It is true; the budget deficit has been cut significantly. But when was the last time any politician talked about generating significant budget surpluses to actually begin paying down our government debt? It’s almost as if politicians don’t even know the word “surplus” exists.

One way for government debt to be reduced, other than actually paying it back, is through inflation. By creating inflation, the government debt is paid off with tomorrow’s dollars, which have less buying power.

What’s an investor to do?

While diversifying into other currencies would be one way to hedge, there aren’t any strong alternatives at this point. I might consider the euro if the weaker nations were to leave and only strong nations like Germany remained; however, I don’t see this occurring anytime soon.

The other option would be to buy assets that move up with inflation, and this certainly includes precious metals, such as gold and silver. From what I see, diversifying your portfolio into a variety of assets that include some hedge protection against inflation is a prudent course of action at this point.

This article How to Protect Your Portfolio as Government Debt Cripples America was originally published at Investment Contrarians

By HY Markets Forex Blog

The ratio of the euro to the U.S. dollar has been hovering close to its highest point in two years during the last few sessions, and the greenback has been encountering headwinds as more market participants anticipate that the Federal Reserve’s quantitative easing will not be tapered for some time.

These bond purchases have been cited by many as having a significant effect on asset values, and individuals who want to make money through trading different investments such as currency pairs should be aware of the key impact that this stimulus has had on the markets.

Fed continues bond purchases

The Fed has managed to push its balance sheet to more than $3 trillion over the last several years, and has been buying $85 billion worth of debt-based financial instruments every month since late last year.

Many market experts have stated that this stimulus has served to push the value of all assets higher. However, this increasing of the money supply has generally been thought of as putting downward pressure on the value of the U.S. dollar.

The greenback has received headwinds lately as many now believe that the Fed will push back tapering its asset purchases for longer than it would have otherwise because of the impact that the partial shutdown of the U.S. government and the debt ceiling dilemma had on the nation’s recovery.

Government shutdown and QE

Economists have predicted that during the fourth quarter of 2013, the nation’s growth rate for its gross domestic product will be reduced by as much as 0.6 percent, Reuters reported. This perceived decline has been attributed to a drop in the confidence of both businesses and consumers, as well as a reduction in government expenditure.

The EUR/USD pair moved higher on Oct. 25, as global market participants responded both to speculation that the bond purchases of the Fed will be sustained for some time and also strong sentiment surrounding the common currency, according to the media outlet.

The common currency appreciated to as much as $1.3832, which was its highest exchange rate relative to the greenback since November 2011, the news source reported. In the afternoon, the euro was valued slightly lower at $1.3808.

Some currency traders stated that they became anxious when the euro moved to higher than $1.38, according to MarketWatch. These individuals stated that the high exchange rate might point to investors reacting too much to technical analysis, and indicated that it has been making both companies and lawmakers in Europe nervous.

“We have turned tactically negative on [the euro/dollar currency pair], as we expect the [European Central Bank] to ease further if the pair threatens to break upward. The positioning in euro is probably net long versus the dollar, which could also cap the upside for the pair,” strategists at Credit Suisse wrote, the news source reported.

The mindset that global investors had surrounding the euro was not deterred by data indicating that the confidence of businesses in Germany declined recently, according to Reuters. The common currency increased 0.9 percent versus the U.S. dollar during the week, and was 4.6 percent higher for 2013 as of Oct. 25, the media outlet reported.

These gains were enjoyed at a time when economists were predicting that the upcoming Fed policy meeting scheduled to start later in October would not result in key officials announcing any plans to taper.

These market experts expected that the policymakers would indicate that they need to be presented with additional evidence of economic strength before deciding to reduce the bond purchases in volume, according to the news source. ICICI Bank analysts wrote about the key importance that these expectations played in the greenback failing to enjoy significant appreciation on Oct. 25.

“The subdued movement in dollar partly reflects expectation that Fed will maintain its asset-purchase program intact in next week’s policy meeting,” they wrote in a note, the media outlet reported.

The speculation surrounding these bond purchases continued to have an effect on the value of the two currencies on Oct. 28, according to Investing.com. The EUR/USD declined slightly, but still lingered close to its highest level in two years. The value of this currency pair dropped 0.13 percent during the day to reach 1.3786.

Strong economic data helped to push the value of the greenback up slightly, the media outlet reported. U.S. industrial production grew at a rate of 0.6 percent in September. This represented the sharpest growth in seven months, and was higher than the 0.4 percent that was expected.

Amid the recent price movements of the two currencies, some analysts have stated that the euro could rise close to $1.40, according to Reuters. These market experts have stated that the expectations that QE will be sustained will help to limit the future upside of the greenback, which will send those looking to make money by trading currencies to the euro.

The post Recent rise in euro versus dollar illustrates importance of Fed speculation appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

By HY Markets Forex Blog

The increase that the U.S. dollar experienced relative to the Japanese yen on Oct. 28 illustrated the key role that both economic data and the stimulus provided by the central banks of different jurisdictions can play in the value of this currency pair.

Knowing about the exchange rate between these two could be helpful to those who want to make money trading the currencies, as they are both considered safe-haven assets by many. In addition, the two nations that issue them – the U.S. and Japan – have some of the largest economies in the world.

Rising value of USD/JPY

The USD/JPY increased to as much as 97.74 early in the session, which represented a gain of 0.35 percent for the day, according to Investing.com. The yen declined relative to many currencies, dropping in value relative to 14 of its 16 major peers, Bloomberg reported.

The Japanese currency fell 0.2 percent relative to the euro, reaching a value of 134.68 relative to the euro, according to the news source. The yen fell by at least 0.3 percent relative to the currencies of South Korea, Brazil, New Zealand and Canada.

Impact of key economic data

Amid these currency fluctuations, the greenback managed to enjoy a slight uptick as global market participants responded to news that U.S. industrial production surpassed expectations in September, according to Investing.com.

However, this encouraging news was not enough to outweigh the impact of lackluster economic data related to the U.S. economy that was released recently, and this information helped to make global market participants even more confident that the Federal Reserve will not announce any plans to taper its existing regimen of bond purchases at the end of its next policy meeting, the media outlet reported.

“We expect little change in the Fed’s statement at the October FOMC meeting,” Barclays strategists wrote in a note sent to clients, according to Reuters. “The soft industrial production report, plus the larger-than-expected decline in pending home sales, is unlikely to give comfort to FOMC policymakers who await stronger economic data before initiating tapering.”

Any further quantitative easing would be considered bearish for the U.S. dollar, as it would cause the money supply to increase. The USD/JPY pair could also be influenced by expectations related to the asset purchases of the Bank of Japan, and deputy governor Kikuo Iwata stated on Oct. 27 that until the central bank of this Asian nation manages to create its desired level of inflation, the financial institution will continue to purchase bonds, according to Bloomberg.

The BOJ has specifically stated that in two years, it wants to have an inflation rate of two percent, Reuters reported. As a result, it is expected that this financial institution will decide to maintain its existing stimulus at the conclusion of its upcoming meeting on monetary policy.

“Market dynamics are still being driven by investors pushing back expectations of when the Fed may begin to taper,” Lee Hardman, who works in London as a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd., told the news source. “Given the low yielding nature of the yen and the very aggressive easing policy that the BOJ’s implementing, that makes the yen still a very attractive funding currency. We’d expect that the yen will tend to underperform.”

The timeline that the Fed will use to taper its bond purchases has been a key concern for global market participants for several months. While there have been significant worries in recent months that the reduction of this stimulus would be announced, many market experts have started feeling fairly certain that this tapering will be put off for some time as a result of the economic headwinds that have been caused by both the partial shutdown of the U.S. government and also the debt dilemma.

The post Increase in USD/JPY shows importance of data and QE speculation appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

By HY Markets Forex Blog

The price of gold declined on Oct. 29, as global market participants responded to a rising value for the U.S. dollar and lackluster data contained in economic reports.

December gold settled at $1,345.50 an ounce at 1:36 p.m. on the Comex division of the New York Mercantile Exchange, Bloomberg reported. This represented a 0.5 percent decline for the day. This contract rose to as much as $1,361.80 per ounce during the prior session. This figure represented the highest value for the future in more than one month.

Gold market less concerned with Fed stimulus

It is important to note that market experts did not cite the outcome of the Federal Reserve’s policy meeting that was scheduled for this week as being important to the price of the precious metal. One market expert even described the Federal Open Market Committee meeting as being a “distraction.” according to MarketWatch.

“The FOMC meeting this week is a distraction with the gold market pricing in something longer term now,” wrote Gene Arensberg, editor of the Got Gold Report. Arensberg noted that the market for the precious metal has hit a “pretty important technical crossroads with gold in the $1,350s.”

He added that “Between $1,350 and $1,375 is [an unknown but almost certain] point of transition where the ‘maybe new bull-market leg’ becomes a ‘confirmed new bull-market leg’, which would invite participation by momentum traders in larger numbers.”

Changing direction of metal

These statements represent a reversal from the importance that market experts have been granting to the role that quantitative easing plays in the price movements of gold. Individuals who want to make money by trading the precious metal might benefit from knowing about this change.

Instead of focusing on the speculation surrounding the outcome of the Fed meeting, market participants noted the climb that the U.S. dollar has experienced lately and how this had an impact on the demand for gold, according to Bloomberg. On Oct. 29, the greenback rose to its highest value in one week against a basket of 10 separate currencies.

“A lack of fresh, bullish fundamental news is keeping buyers scarce,” Jim Wyckoff, a senior analyst at Montreal-based research firm Kitco Inc., said in a report, according to the news source. “The key ‘outside markets’ are also in a bearish daily posture for the precious metals – a firmer U.S. Dollar Index and weaker crude-oil prices.”

In addition to the the role the greenback has placed in lowering the price of gold, it was noted that a key measure of consumer spending declined in September, Reuters reported. Many market participants decided to make use of their recent gains and take profits after being notified of this key economic information.

Some investors have lost faith in gold

It is important to note that the precious metal fell into a bear market in April, and is down by approximately 20 percent for the year, according to Bloomberg. Gold declined to less than $1,200 per ounce in June, and some market experts have openly stated that they no longer perceive the commodity as a safe-haven asset.

This shift in perception that many have experienced is worth being noted by those who want to make money trading gold.

The post Gold prices drop amid rising dollar and lackluster economic data appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog