Gold spot price coughs up 1% to be at $1,240

on Jan 21, 2014
Updated: Oct 21, 2019
Listen Tuesday, January 21th:_ The XAU/USD has today been dropping, pushed lower by a rise in equities and a US dollar strengthened on renewed speculation that the US Federal Reserve may further cut its asset purchasing stimulus at its FOMC meeting on the 28th and 29th of this month, following the $10 billion trim decided in December.

The Fed’s quantitative easing programme has been massively supporting the rising price of gold since onset of the global financial crisis, with central bank liquidity and a low interest rate environment prompting investors to shift to non-interest bearing assets.
Societe Generale analyst Robin Bhar says that the “dollar strength is really the driver for gold and talks that the Fed is more likely to trim its bond buying further in February added even more pressure”. Bhar believes that the focus will remain on currency movements and the Fed’s tapering stance.

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The gold spot price has thus far today lost about one percent, falling to a four-day low at $1,240 an ounce, after yesterday reaching a six-week high at $1,259. Analysts see technical resistance at around $1,260.
Today’s easing is also being supported by the shooting star candlestick pattern on the daily chart, which indicates strong bearish pressure.

The US Dollar Index is meanwhile currently up 0.14 percent.
Premiums for gold of 99.99 percent purity on the Shanghai Gold Exchange today shrank to around $13 from yesterday’s $14, though trading volumes were higher.
Analysts say Chinese gold imports, the lone bright spot in an otherwise disastrous year for bullion in 2013, look set to fall from last year’s record levels.

The National Commodity and Derivatives Exchange (NCDEX), India’s leading commodities exchange, reports that its just-launched gold contract called GoldHedge attracted a volume of 1,300 kilograms, worth $52 million, in its first two trading days on 16 and 17 January.

According to NCDEX, the new contract aims to furnish traders and consumers with a straightforward and transparent goldprice.
“Jewellers, traders, banks, consumers and even gold refiners will now be able to perceive maximum correlation between Indian and international gold prices through the Goldhedge contract, which is designed to remain unclouded by domestic demand supply factors.”
NCDEX CEO Samir Shah describes GoldHedge in this way: “Our product is the perfect solution to the distortion in prices created by fluctuating demand supply conditions and takes forward the Reserve Bank of India’s mission of financialisation of gold to reduce the burden of imports on the current account deficit.”
According to a survey of traders and analysts by the London Bullion Market Association, gold will average $1,219 an ounce this year, with the price rising no more than 10 percent from its current levels after last year logging the largest calendar year fall in three decades.


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