Gold is
reaching for an important long term support line at the level of US$1044.00 per
Troy Oz. This support was established way back at the very start of 2010. It
resides just above the psychologically important price of $1000.00.
The fall in
the price of gold has been constant since it became apparent that U.S. Federal
Reserve easing measures were over and that this heralded the onset of rate rises,
on the cusp of which we now seem to be.
Those hedge funds that invested in gold at the start of Quantitative
Easing in the U. S. (remember that?), in the conviction that QE was going to
lead to rampant inflation, have long since left the scene. They are more likely
now to be reminding each other that gold does not, and never will, pay interest
to those who invest in it, never mind dividends or yield.
There are
still some who hold that a demand for physical gold will provide a return based
on capital appreciation, but they have to be very patient indeed, and they must
ignore the fact that the volume of physical gold that changes hands is only a small
fraction of that which is the subject of options and futures agreements. Who
now believes that these are all backed by gold bullion holdings?
U.S. GDP revised upward – market
reaction indicates rate rise could be priced in
Tuesday saw
a revision upward in the U.S. GDP figures for the third quarter. Normally, a
report like this would light a fire under the U. S. dollar, but the market
initially went in the opposite direction on the news, and then settled down
into a frustrating see-saw type of movement.
This might
be taken as a sign that the much anticipated rate rise that we are supposed to
see in December is already priced in.
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