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16.07.2013 15:20

Gold: an overview of the market situation

Gold prices have risen markedly, which was due to the weakening of the U.S. dollar in anticipation of my head of the Federal Reserve Ben Bernanke, in which, as expected, he will be able to shed light on the future of the program to purchase assets, as well as their timing. Note that the precious metals rose by 5% last week, showing the biggest weekly gain in nearly two years, on hopes for further stimulus after Bernanke's remarks.

But the prices are stuck in a narrow range over the past three sessions, unable to cross the level above $ 1,300. Many investors are of the opinion that the market will have to think of life without quantitative easing, at least in the United States. Note that the narrowing of the bond purchase program will keep raising interest rates and strengthen the dollar, which could reduce the attractiveness of gold.

Meanwhile, we note that gold prices have helped today's U.S. data. It is learned that U.S. consumer prices rose slightly more than expected in June. The rise in prices to a large extent was caused by a jump in gasoline prices.

The Labor Department reported that consumer prices rose 0.5 percent in June, after rising 0.1 percent in May. Economists had expected a price increase of 0.3 percent.

Excluding food and energy, core CPI rose 0.2 percent in June, the same increase was in the previous month, and in the estimates of economists. Energy prices rose in June by 3.4%, while food rose by 0.2%.

Experts point out that the appeal of gold as a safe haven and a hedge against inflation has been tarnished this year, which was due to the strengthening of the dollar, the stock market, rising bond yields, which led to a rapid outflow of gold exchange-traded funds. Recall that this year the stock has decreased by 19 million ounces, or $ 24 billion at current prices.

The cost of the August gold futures on COMEX today rose to a high of $ 1291.30 an ounce.

Market Focus

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  • German private sector output growth slowed for the second month running in July
  • ECB's Mersch says as conditions normalise, it is unlikely that uncoventional policies will remain necessary
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