Gold Weekly Fundamental Analysis October 21-25, 2013 Forecast Gold ended the week at 1314.90 as futures fell from a one-week high as a rally in global equities curbed demand for the precious metal as an alternative investment. The MSCI All-Country World Index of stocks extended a rally to a five-year high after China’s economic growth accelerated. Gold jumped 3.9 percent in the previous two days amid speculation that the Federal Reserve will hold off on scaling back monetary stimulus. Gold has slumped 22 percent this year, heading for the first annual decline since 2000. Some investors lost faith in the metal as a store of value as U.S. equities rallied to a record and inflation remained muted. The stalemate over U.S. fiscal policy that shut the government for 16 days slowed economic growth, President Barack Obama said yesterday. Narayana Kocherlakota, the president of the Minneapolis Fed, said policy makers should maintain low interest rates to reduce unemployment, even at the risk of temporarily pushing inflation above the central bank’s 2 percent goal. Gold declined for the first time in four days after U.S. lawmakers reached an agreement to increase the debt ceiling and avert a government default in the largest economy, damping demand for haven assets. Gold will drop in each of the next four quarters and reach a four-year low as reduced U.S. stimulus in response to faster growth curbs demand for bullion as a haven, the 10 most-accurate forecasters tracked by Bloomberg said. Holdings in the SPDR Gold Trust, the biggest such ETF, contracted to 885.53 metric tons yesterday, the least since February 2009. U.S. employment growth “remained modest” in September, and price and wage pressures “were again limited,” the central bank said, based on information gathered through Oct. 7, after the partial shutdown began Oct. 1. Four Fed districts reported slower growth while the remaining eight said the expansion held steady amid the uncertainty, which saw confidence among U.S. homebuilders falling to a four-month low in October. Fed policy makers are scheduled to gather Oct. 29-30 after they unexpectedly refrained back from paring stimulus at their last meeting. BlackRock Inc. Chief Executive Officer Laurence D. Fink said in an interview on CNBC that the Fed may not taper until as late as June following the political stalemate.
Posted on: Sun, 20 Oct 2013 08:09:35 +0000
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