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03.11.2014 16:20

Gold: an overview of the market situation

Gold prices fell slightly today, approaching with up to four-year low, helped by the rise of the dollar index to its highest level since mid-2010. Such dynamics is related to the speculation that the Federal Reserve will start tightening their monetary policy sooner than other major CB.

It is worth emphasizing that the demand for the precious metal tends to decrease when the economic outlook improves and investors buy riskier assets. Given that the US is moving towards higher interest rates, and the rest of the world, especially Europe and Asia, are moving in the direction of easing, the dollar is likely to continue. This will keep downward pressure on gold.

Market participants also continue to act out Friday's decision by the Bank of Japan. Recall, the Bank of Japan unexpectedly announced an increase in the volume of bond purchases to 80 trillion. yen against the previous target range of 60-70 trillion. yen. The central bank is hoping to revive economic activity and inflation by buying more government bonds in Japan.

Reduced price was also associated with the release of positive US data. A report published by the Institute for Supply Management (ISM), showed that in October, manufacturing activity in the US has improved, exceeding forecasts of economists expect a slight decrease in the index. PMI index for the US manufacturing grew in October to 59.0 against 56.6 in September. A reading above 50 indicates expansion of industrial activity. Note that the latter value was higher than the estimates of experts - expect a slight decrease to 56.5.

The pressure on the precious metal has and reduced demand for gold in China. Experts note that the sluggish demand for gold is particularly unusual for this time of year, when the premium on gold market usually grow: at this time, Chinese traders are stocking gold before the New Year according to the lunar calendar, which will be celebrated in February. The new year of the lunar calendar - the peak of the gold purchases in China. However, the dynamics of prices in Shanghai indicates that even the Chinese buyers are not going to buy gold at discount prices, in the expectation that gold will become cheaper.

"In the face of declining gold prices, consumers and traders are increasingly expecting a possible fall to the psychological level of $ 1,000. But in the second half of 2015 prices are likely to recover, "- said Gnanasekar Tiagaradzhan head Commtrendz Research.

The cost of December gold futures on the COMEX today dropped to 1168.30 dollars per ounce.

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