Has gold settled for its gains and started a long term bearish trend?!
Rising voices are expecting that gold and other major metals have indeed peaked and now entered a new bearish direction, where gold's record at 1227.00 was seemingly the most we saw. Some studies show that the current drop gold is facing will remind us of its plunge in the 80's of the last century, projecting that gold will now retreat heavily back to $400 - $500 areas!
The pessimistic change of outlook for the metal was dominated by the bullish stabled dollar wave, which comes alongside crude's softness and rising equity markets and other high yielding investments; all leading to a dampened appeal for the shiny yellow.
Gold dropped by 0.30% and close at 1123.00 in New York yesterday, while silver traded sideways from its highest of 17.50 to its lowest at 17.11, before closing at 17.39; platinum, however, fell by 0.07% to end at $1447.00 per ounce in NY.
After the unexpected drop in the US jobless rate in November followed by strong data from the economy, the market gained more confirmations that the recession is receding supporting the dollar's gains on a stronger outlook.
Investors and analysis rushed in expecting the Feds to start reversing their monetary easing sooner than expected and the recovery gains momentum. From here the dollar entered a major bullish wave that had negatively impacted gold, causing it to drop.
Returning to the facts; have the U.S. feds reached that degree of idiocy to build their monetary policy on month or two sound fundamentals?! And what data? Data that has integrated retail sale and jobs, in addition to some other minor data! We think that it is naive to expect the feds to raise interest rates at such an early time, as well as expect a major recovery in the U.S. economy through the upcoming few months.
On the other hand, stock indices had sharply risen throughout the past period, starting since last March before, returning to stabilize at the top heading now steadily to the upside. We currently witness extremely volatility that lean towards ascending within main stock indices; however, today the Nikkei index gained 0.93%, while the FTSE index fell yesterday by 0.56% and the DAX index followed to gain by 0.16%. Meanwhile, U.S. stock indices dropped yesterday anticipating the feds decision today.
The dollar slightly fell today, while crude advanced on the back of speculative profit taking; thus, pushing gold and silver to move to the upside today. As of 02:14 a.m. ET; gold traded at $1126.90 per ounce, higher by 0.35%; silver slightly rose by 0.12% to trade at $17.41 per ounce; whereas platinum plummeted by 0.28% to trade at $1443.00.