19 Nov 2013
Gold continues its slump as soaring equity markets draw investors
FXstreet.com (London) - Despite continuing perceived commitment to ultra-loose monetary policy from the Federal Reserve, gold remains under pressure with soaring equity markets putting any investment in the yellow mental in the shade. The precious metal is set for its first annual decline in 13 years.
Even the prospect of Ben Bernanke’s replacement by the arguably even more dovish Janet Yellen as chairman of the Fed has done nothing to boost the attractiveness of gold.
Gold is currently trading at USD1,276.30/oz on choppy intraday trading. It is now a long way from the September 2011 highs above USD1,900 /oz on Eurozone debt concerns and a US debt ceiling stand off.
With waning volatility in the markets, low inflationary pressures against which to hedge, as well as an extremely attractive equities market that yesterday burst through to new highs, the dollar has been in almost constant decline through 2013, losing 22.9 percent on the year to date.
According to a report from Bloomberg, Holdings in gold-backed exchange-traded products fell 2 metric tons to 1,867.5 tons yesterday, the lowest since April 2010.
With little to boost demand for gold on the horizon, the next big threat could come from a relative tightening of Fed policy should it move to taper its USD85bn-a-month asset purchase programme at its March meeting.
The Fed will release minutes of its Oct. 29-30 meeting tomorrow, which may show some clues to the timeline for any tapering.
Even the prospect of Ben Bernanke’s replacement by the arguably even more dovish Janet Yellen as chairman of the Fed has done nothing to boost the attractiveness of gold.
Gold is currently trading at USD1,276.30/oz on choppy intraday trading. It is now a long way from the September 2011 highs above USD1,900 /oz on Eurozone debt concerns and a US debt ceiling stand off.
With waning volatility in the markets, low inflationary pressures against which to hedge, as well as an extremely attractive equities market that yesterday burst through to new highs, the dollar has been in almost constant decline through 2013, losing 22.9 percent on the year to date.
According to a report from Bloomberg, Holdings in gold-backed exchange-traded products fell 2 metric tons to 1,867.5 tons yesterday, the lowest since April 2010.
With little to boost demand for gold on the horizon, the next big threat could come from a relative tightening of Fed policy should it move to taper its USD85bn-a-month asset purchase programme at its March meeting.
The Fed will release minutes of its Oct. 29-30 meeting tomorrow, which may show some clues to the timeline for any tapering.