Potential of the gold market is limited while the US Dollar has all chances to strengthen
COMEX showed controversial dynamics in the market of gold on September 26th. Along with the uncertainty around the Fed's intention to taper the bond purchases keeps increasing the volatility in the global gold market.
There seems to be no clear interest in the precious metal as far as the real buyer of physical gold is concerned. The reverse correlation of gold price dynamics got more intensive as soon as the Fed decided to abandon the first round of QE tapering. Besides, retail buyers in Asia reduced their exposure to gold and are waiting when the situation will be clarified.
Financial markets affected by US debt ceiling
The Republicans are backing the idea of raising the ceiling within the framework of discussing the US debt ceiling in the US Congress. Another backer of the idea is the US Department of Treasury. Consequently the broad market is concerned since gold outperformed other precious metals in last week.
The key driver is whether the Fed finally decides to taper its accommodative policy (QE) in the near future when it comes to the prospects of gold in the 4th quarter of the year. The resolution of the debt ceiling issue in the US Congress seems to be hindered by the Fed's reluctance to taper the QE program. Potential of the gold market is limited while the US Dollar has all chances to strengthen if the Fed ultimately decided to taper the bond purchases every month.
The official sector keeps buying gold, according to the IMF. Particularly, the Turkish central bank increased its gold reserves by 23 tons last months. Russian central bank purchased 132 tons of gold last month. And other emerging markets are also increasing their gold reserves in attempt to diversify their gold and currency reserves. This contributed by the decline in gold prices
Central banks will slow down their gold purchases as soon as the US Dollar strengthens and gold prices consolidate.
Gold has been rallying for 4 consecutive trading sessions, according to TOP10 of Masterforex-V Academy's rating of Forex brokers report (GKFX) that amid growing concerns caused by debt ceiling talks. The December futures gained 1.5% up to $1.336.20 per ounce even though that the previous 3 session were bearish. The precious metal is down by 20% YTD, amid the strengthening of the US stock market and inflation slowdown. In August gold prices gained 6.3% amid some tensions in the Middle East.
At the meantime experts say that US Congressmen shouldn't delay the resolution of the debt ceiling issue otherwise the USA may get its credit rating cut. And that may result some kind of a paradox when the US Dollar turns into a safe asset and US bond yield increase.
There seems to be no clear interest in the precious metal as far as the real buyer of physical gold is concerned. The reverse correlation of gold price dynamics got more intensive as soon as the Fed decided to abandon the first round of QE tapering. Besides, retail buyers in Asia reduced their exposure to gold and are waiting when the situation will be clarified.
Financial markets affected by US debt ceiling
The Republicans are backing the idea of raising the ceiling within the framework of discussing the US debt ceiling in the US Congress. Another backer of the idea is the US Department of Treasury. Consequently the broad market is concerned since gold outperformed other precious metals in last week.
The key driver is whether the Fed finally decides to taper its accommodative policy (QE) in the near future when it comes to the prospects of gold in the 4th quarter of the year. The resolution of the debt ceiling issue in the US Congress seems to be hindered by the Fed's reluctance to taper the QE program. Potential of the gold market is limited while the US Dollar has all chances to strengthen if the Fed ultimately decided to taper the bond purchases every month.
The official sector keeps buying gold, according to the IMF. Particularly, the Turkish central bank increased its gold reserves by 23 tons last months. Russian central bank purchased 132 tons of gold last month. And other emerging markets are also increasing their gold reserves in attempt to diversify their gold and currency reserves. This contributed by the decline in gold prices
Central banks will slow down their gold purchases as soon as the US Dollar strengthens and gold prices consolidate.
Gold has been rallying for 4 consecutive trading sessions, according to TOP10 of Masterforex-V Academy's rating of Forex brokers report (GKFX) that amid growing concerns caused by debt ceiling talks. The December futures gained 1.5% up to $1.336.20 per ounce even though that the previous 3 session were bearish. The precious metal is down by 20% YTD, amid the strengthening of the US stock market and inflation slowdown. In August gold prices gained 6.3% amid some tensions in the Middle East.
At the meantime experts say that US Congressmen shouldn't delay the resolution of the debt ceiling issue otherwise the USA may get its credit rating cut. And that may result some kind of a paradox when the US Dollar turns into a safe asset and US bond yield increase.
Source...