The Week In Hindsight 28 March 2014

Gold tracked US treasuries lower this week as higher consumer spending and better GDP in the world’s number one economy reignited optimism over the recovery and cemented expectations that the FOMC will continue the tapering process over the coming months.

Comments from Chicago Fed President Charles Evans also contributed to the push lower in the latter half of the week. This was as the policy maker gave an account of his own interest rate expectations during a speech at the Credit Suisse Asian Investment Conference. Evans, an FOMC voting member, stated that although he felt it were best for rates to remain at current levels well into 2015, he did view “sometime next year” as an appropriate description of when the first rise is likely to occur.

Another contributor to the precious metal’s decline over the week has been the stern rhetoric of global leaders toward Russia. The ongoing and conditional statements of intent have been taken by the market largely as a confirmation that the Ukraine/Crimea crisis is now over from a western policy perspective, with no meaningful action to be taken. 

As a result, the perceived need for investors to hold catastrophe insurance is now diminishing which could mean that, given Friday’s break below $1300, gold could face further downside pressure once into the new week.

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