Gold Choppiness Continues
Today’s Spotlight Market
Gold futures have been unable to gain any traction in recent sessions, as a stronger US Dollar has thwarted the bull camp. Recent comments from the Federal Reserve indicated that the central bank will try to get ahead of inflation as soon as it rears its head. Unless the Fed changes its tone, the comments are likely to hang above the Gold market like a black cloud. At the same time, prices may continue to be underpinned by unrest in Ukraine and the Middle East. The ongoing questions as to who downed the Malaysian airliner make it virtually impossible for Ukrainian-Russian relations to improve. In Gaza, similarly, there seems to be no light at the end of the tunnel to the conflict.
Fundamentals? – ? Many investors are becoming more optimistic about the US economy, which may continue to pressure the price of Gold. Even investors who are bullish long-term on Gold are favoring stocks and other riskier assets, fearing the metal may move higher but under perform versus equities. Physical consumption of Gold has also failed to inspire traders. Chinese consumption of Gold has fallen by 19% during the first half of this year. Last year, China eclipsed India as the world’s largest Gold consumer. India’s import restrictions on Gold have also hurt demand for the precious metal. The Gold Investor Index, which measures the balance of customers adding to Gold holdings over those reducing them, dropped to 51.2 in June from 52.4 in May. This is certainly trending lower, indicating reduced investor appetite for Gold. A 50 reading on this indicator would indicate an equal number of investors adding and reducing their positions.
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the December Gold contract mired in choppy, sideways trading. Prices may continue to center around the 1300 level, trading in a wide range between 1250 and 1350. Prices have been so flat longer-term that the 100-day moving average is virtually horizontal.
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