What Is In The Future For Gold Prices ?

October 21, 2013 at 08:21


A big question in the future is how and when central banks around the world unwind their financial stimulus. ‪How that is handled could determine when stocks next face a bear market, most commonly defined as a 20% decline from a high and gold could tumble the same. While traders optimistic about the immediate future due to the US government shutdown and lackluster data of late the question is now when, not why or how. England maybe the first nation to begin increasing interest rates or reducing stimulus, but a global concerted effort needs to get underway so that it does not collapse the global recovery.

Gold of late has been steadily gaining now that the US debt ceiling and budget crisis have been pushed into 2014 and traders can deal with the here and now. The next now facing gold speculators is the upcoming FOMC meeting at the end of the month. The prices of gold rallied during last week. These recent events may have contributed to the rally of gold and silver. These latest developments may have closed the door on the FOMC tapering the bond purchase program anytime soon. Here is a short outlook for October 21st to October 25th including: U.S non-farm payroll report, EU monetary developments, German Ifo business climate, U.S home sales reports, BOC rate decision, China and EU’s manufacturing PMI flash updates, and U.S. jobless claims. Last week, the price of gold grew by 3.64%. The average price reached $1,293.7 which was 0.81% below the previous week’s average. Gold ended the week at $1,314.30. The price of silver increased by 3.07%. Gold is trading this morning at 1318.60 up by $4 in the Asian session while silver is up 210 points at 22.123.

Gold prices fell on Friday due to profit booking and investment sentiment continued to remain weak with holdings in SPDR Gold Trust declining constantly. However, hopes that Fed may postpone the wind down of its stimulus program at least till March boosted gold’s inflation hedge appeal and limited the downside in prices. India’s gold jewelry exports rose in September by 16.5% as imports have resumed, easing supply pressures. Gold prices can move up today due to a weaker dollar and expectations of continued loose monetary policy by Fed in the near future. However, upside could be limited as investors would wait for US employment data due tomorrow.