The Week In Hindsight, 21 March 2014
Gold also fell victim to indifference throughout the early stages of the week as the market shrugged off punitive western efforts to sanction Russia over its annexation of Crimea. The metal fell further later in the week as US policy makers announced a further reduction to the rate of bond purchases and media at the FOMC press conference broached the subject of the first hike to the federal funds rate.
Although we expect tapering to continue and interest rate expectations to also become a driver of gold over the medium term, our current expectation is that gold remains supported at the weeks lows for the foreseeable future, much the same as with oil benchmarks. This is as the threat of meaningful sanctions against Russia and further escalations in the crisis still exist in the background. This will be likely to see strong offers for spot gold at the $1330 level.
Despite this, our medium to long term view for the metal remains unchanged. When the crisis begins to subside, gold will likely succumb to renewed selling pressure as speculative buyers unwind their positions.