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04.08.2014 15:20

Gold: an overview of the market situation

Gold prices fell slightly today, while approaching to the level of $ 1290 per ounce, which is associated with the publication of Friday's labor market data, which were worse than expected led investors to doubt the expected increase in the Fed's key interest rate.

Add that gold is under heavy selling pressure in recent weeks, as improvements in the U.S. economy generate speculation that the Fed will raise interest rates sooner than expected, which would reduce the demand for gold for use as a hedge against the flexible monetary credit policy.

"The situation in the gold market remains poor, in part because of fears that the metal will react to the expected change in U.S. monetary forecasts - said Saxo Bank analyst Ole Hansen. - But at the same time, bond yields fell again, and the equity markets were down last week. ""It can bring back some investors back into gold, but not as a defensive asset, but as an alternative to investment," - he added.

On the dynamics of trading also reflected geopolitical factors. Some investors buy gold as insurance against political and financial instability, considering that in times of turmoil, it will retain its value more reliably than other assets.

"Even despite the fact that the tension in the Gaza Strip and the Ukraine does not weaken, its value is secondary. Direction of the price of gold is determined by the state of the U.S. economy and Fed policy," - said the company's broker Newedge Thomas Capalbo.

With regard to the physical market, there is demand remains weak against the background of the summer. In addition, many consumers expect further price declines. Premiums for gold in China is approximately $ 3 per ounce, compared with more than $ 20 early this year. Premium in other parts of Asia also remain largely stable over the last few weeks.

The cost of the August gold futures on the COMEX today fell $ 2.5 - to $ 1291.10 per ounce.

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