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29.01.2014 16:20

Gold: an overview of the market situation

Gold prices rose significantly today as stock markets lost previously won positions in anticipation of the announcement of the outcome of the meeting of the Federal Reserve System . Many traders are waiting for news about the fact that the U.S. central bank will do its program of bond purchases , known as quantitative easing.

Fed policy is expected to announce a reduction of monthly purchases of Treasury and mortgage-backed securities to $ 5 billion , bringing the total monthly volume of asset purchases will be at the level of $ 65 billion . Recall that expectations about what the Fed will reduce emergency measures to stimulate the U.S. economy, which were introduced in the wake of the global financial crisis , have been a major factor in the fall in gold prices (last year the price of the precious metal fell by 28 per cent) .

Although a steady decline in the volume of QE now, mainly reflected in market prices , any indication that this change will be faster or slower than expected, can significantly affect the price of gold.

Precious metal recovered losses that were recorded in the first half of today's trading , as rising stock markets plays out on the news that the recovery in emerging markets is likely to be short-lived.

"The decline in the U.S. stock markets improved mood and appeal of gold as a safe investment ," - said an investment analyst at Phillip Futures Joyce Liu . Gold is considered a more reliable alternative to risky assets such as stocks . But Liu warned of the possibility of correction in prices approaching resistance level $ 1,275 per ounce.

I also add that the Chinese gold purchases slowed down this week as traders and consumers are beginning to prepare for the Lunar New Year, which starts on January 31. Chinese Gold Award for 99.99 fine on the Shanghai Gold Exchange have fallen to about $ 5.50 per ounce on Wednesday from $ 7 in the previous session. Recall that in early January, they were above $ 20. Trading volume on Wednesday was a little over 8 tons - the lowest since Dec. 31.

Cost February gold futures on the COMEX today rose to $ 1264.90 per ounce.

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