Gold Starts The Week Off Lower
Gold turned lower in yesterday’s session after stocks reversed gains and the US dollar rallied to the highest in more than a month, but some traders opted to remain on the sidelines before a US Fed Reserve (FOMC) meeting tomorrow, that might weigh on the shiny metal.
Gold has risen more than 9% this year, building on eleven sequential years of increases, at the last meeting of the FOMC when the Fed asserted it would keep rates near 0 till at least 2014 Gold soared.
But the Federal Reserve Board may need to rethink any plans for further financial easing when it meets on Tues. The US economy is recovering and the Fed’s would like to slip away quietly without mentioning any QE. Gold hit an intraday high of $1,713.80 per oz before dipping to $1,704.71 by mid day it was down $3.32.
At the end of last week gold rose almost 1% on higher crude oil and the greenback after data in the US showed an jobs grew solidly for a 3rd straight month surpassing forecasts.
Bullion reached a record around $1,920 last fall.
“We will see more data about the U.S economy, and whether there’ll be a QE3,” declared Ronald Leung, director of Lee Cheong Gold Dealers in HK, talking about a probable 3rd bond-buying program to lower rates.
If there isn’t any QE3, then there’ll be disappointed selling again. If the buck continues to climb, then naturally gold will be under stress. There’s a bit of physical purchasing. A few individuals cover their shorts after the weekend.
Gold for April slid $6.00 to $1,705.50. Money Markets, including hedge funds and other big traders, cut their bullish positions in gold to the lowest level in 5 weeks in the week of March 6, as traders unwound from a late-February top near $1,800 per oz.
The Nikkei average dipped after breaking above ten thousand to a seven-month high as hedge funds locked in profit following a 3.7 % rally in the prior 2 sessions and over 16% this year.
Gold frequently tracks stocks as it is at present understood as a risk asset, particularly in the monetary chaos in Europe, where some stockholders will cash in the metal to cover losses in other markets. Gold looks to have recovered from last week’s technical dip, but remains exposed to correction inside a broadly positive long term trend.
Investors will keep a close eye out for any news or rumors on Tuesday from the Fed. The Fed and Mr. Bernanke have a way of shaking up the markets.
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