Gold Erratic on Fed Action Speculation

Gold swung between gains and losses in New York as investors weighed signs physical demand may rise at lower prices against the outlook for less U.S. stimulus.

The U.S. House passed a federal budget plan yesterday, boosting speculation the measure will support the economy and make it easier for the Federal Reserve to start to reduce stimulus. Volumes for bullion of 99.99 percent purity on the Shanghai Gold Exchange, the benchmark spot contract, rose today to the highest since Nov. 28.

Gold is set for the first annual drop in 13 years as some investors lost faith in the metal as a store of value and on speculation the Fed will pare monetary stimulus as the economy improves. Bullion futures touched $1,210.10 an ounce on Dec. 6, the lowest since July 5, after data showed U.S. payrolls gained more than forecast in November.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza