There are a myriad of reasons for the volatile behavior in the precious metals sector and this post can’t cover all of them but hopefully will reflect some of the reasons that we view as important.
The next ten days or so will present gold with two major events both of which could impact on gold in different ways depending on their particular outcome.
The USD is up 5% in the last 3 months and gold is holding just above $1269/oz, as we write. The presidential election might be center stage but the possibility of a rate hike before the year end is being eagerly observed.
The programme known as Quantitative Easing is due to be halted at the end of October, coinciding with the next meeting of the Federal Open Market Committee which is scheduled for 28/29 October 2014.
Gold had a horrendous year in 2013 disappointing many of its supporters; however, 2014 started brightly bringing with it much hope for an attempt at achieving new record highs.
Investors are disillusioned by the inability of silver prices to rise to higher ground as silver enters its 4th year of looking anything but sparkling.
There are a myriad of reasons that come into play which effect the direction of gold prices but today we will look at just one of them; the effect of monetary policy as perpetrated by The Federal Reserve and the European Central Bank (ECB)
Many believe that the bottom is now in and the bull has resumed charge, with the bears being exhausted. We would like to agree with them but we are still of the opinion that a challenge to the June lows could still lie ahead of us.