Golden Abyss
Today’s Spotlight Market
Gold futures remain centered around the $1300 level, unable to form a trend in either direction. Physical demand for the precious metal has remained lackluster, at best, while the recent strength in the greenback has made Gold unappealing to investors. However, tension in the Middle East and Ukraine has provided price support for the metal. Trading volume in Gold is also down 18% over the past 100 trading days, according to Bloomberg, which can be viewed as a sign that traders are undecided and would rather sit on the sidelines.
Fundamentals
Demand for Gold was down 16% in the second quarter this year, largely due to weak imports by China and India. Indian demand for Gold could remain very soft as long as government restrictions on imports remain in place. The Indian government has loosened the restrictions for some banks, but is reluctant to repeal the laws. China has been cracking down on corruption, making the wealthy more reluctant to display their wealth. As a result, demand for luxury items, including jewelry, has been extremely weak. The US Dollar recently reached 9-month highs versus the Euro.? The US and Europe are heading in different directions on the inflation front.? The Federal Reserve has been curtailing its asset purchases and suggests that it will raise interest rates sooner rather than later. On the other hand, the ECB has continued to inject liquidity in hopes of stimulating inflation.
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the December Gold contract continuing to trade in a sideways pattern, centered on the 1310 level.? The oscillators and chart pattern both point toward more choppiness ahead.? The RSI near the 50 percent level while the momentum indicator sits near the zero line.
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