
As expected
yesterday, in our piece pointing to an example of an upcoming high probability trade, a short in gold, the precious metal took a tumble overnight, which brought it down through
the localised support the price action had developed at 1308.00 US dollars per
troy ounce.
There is
now a growing and well justified expectation that the US Federal Reserve will soon
initiate the so-called tapering of its bond buying program, or Quantitative
Easing (QE), which will have the effect of strengthening the greenback and
weakening gold, as gold will no longer be needed to play the part of a hedge against a
depreciating USD.
Ironically,
this is in spite of the apparent decision of the leader of the Federal Reserve,
Mr. Bernanke, to make no comment at all regarding QE after the most recent FOMC
meeting. Words spoken before led to a bout of volatility, which is exactly what
Mr. Bernanke wants to avoid.
But he does
not need to say anything. US economic indicators, from Purchasing Managers
Index (PMI) – up to 55.4% for July, an increase of a very significant 4.5
percentage points from June’s figure, through US Gross Domestic Product (GDP) –
increased 1.7% in the second quarter of 2013 as against the 1.0% growth which
was the consensus of economists, to employment – an increase of 200,000 jobs in
July according to ADP, which presages today’s US Non Farm Payrolls report, all do
the talking for him.
WOW!! really impressive blog hope this will us in trading.
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