Commodity Update; Gold – 04 November 2014
Gold falls victim to better economic data and the “final taper”
While equity markets rose across the globe last week, gold fell victim to a flurry of better economic data and the Federal Reserve’s decision to carry out its “final taper”. This saw the metal coming under substantial pressure from mid week, driving it back below the all important $1180 level and placing it in danger of a further leg downwards to new multi-year lows.
It comes as no surprise to us that, with the FOMC’s acknowledgement that spare capacity within the US labour market is “diminishing”, the BOJ’s leap into action last week did little to alleviate the pressure upon the precious metal.
This is as US policy makers have now cleared the way for the economy to transition toward a higher rate environment, which supports our belief that the long term downward trend in the metal has resumed and, in coming weeks, we should expect new multi-year lows for the metal.
Looking to the immediate future, the week ahead could see gold draw some support for a corrective move if ISM non-manufacturing, payrolls and unemployment numbers due from the US fail to meet expectations. Given several months of strong gains in each of the measures, it is possible that one of them will have ran out of steam during October.
Such an outcome could provide the impetus for a brief bounce back toward higher levels however, without a resurgence of geopolitical or economic risk; we doubt that this would be able to sustain itself for long.
Spot Gold // Hourly Intervals
.
IMPORTANT:
The contents of this report and the Stockatonia website (https://www.stockatonia.co.uk/) have been prepared to provide general information only, and as such, the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Please always remember that the value of investments may fall as well as rise. Investing in securities, and any other products associated with them, carries a high degree of risk and may not be suitable for all investors. For advice or guidance related to investing in securities markets, please consult with your own financial adviser.
Disclaimer
The information provided by Stockatonia, via both the telephone as well as the Stockatonia websites, is prepared as general information and general information only. As a result, the information in question does not constitute a recommendation to either buy and sell or not to buy and sell, any items or products treated as securities or financial instruments under UK laws and regulations.
To the extent that it is necessary, you agree not to act directly upon any information made available via telephone contact with Stockatonia and its representatives, as well as online contact with Stockatonia and its representatives, without first consulting your own financial adviser or investment adviser.
To the extent that it is permitted under the laws of the United Kingdom, Stockatonia and its representatives can accept no liability whatsoever in relation to losses incurred by clients, prospective clients and members of the public where these losses have arisen out of action, or inaction, which has taken place as a result of any form of contact with Stockatonia or its representatives.
This may be contact carried out by internet-driven media, letters and materials which are sent by post as well as information conveyed by Stockatonia and its representatives via the telephone.
Leave A Comment