Gold futures loosing ground


On Thursday gold futures declined further in Asian trading hours. The commodity price lost almost $20 per ounce. It seems, investors are loosing interest in the gold market.

In electronic on the Comex division the yellow metal for April delivery lost $19 to bottom at $1,559.00 per ounce.

Yesterday on the New York Mercantile Exchange of Comex gold fell by 1.6% in regular trading. The contract declined by $26.20%, to settle at $1,578 per ounce the on Wednesday. It seems gold is heading for a fifth straight loss session.

According to HSBC metal analysts, yesterday bullion losses went further among macro-hedging fund liquidation. That happened in the early trading before the Federal Open Market Committee meeting outcome release.

Though, the regular gold session on the Comex closed before the data from the Federal Reserve meeting was released. This spurred additional gold price decline on Globex as prices hit $1,570 per ounce.

Serious concerns rose before the Federal Reserve meeting minutes. The possibility that policymakers may pull back the massive quantitative-easing program brought uneasiness on the market. The US central bank said that the program with be reconsidered once more in March.

The growing inflation was supported by Fed’s quantitative easing. Therefore gold met a positive driver in the program. Gold is commonly viewed as a hedge against inflation. Hence pressure on gold prices came from concerns that Fed could scale back or even end bond buying very soon.

The improving global economy is a driver which supports the possible pullback of quantitative easing. The stabilized financial and equity markets could have provoked the ongoing liquidation in gold prices.

Analysts said that a decline in the 50-day moving average below the 200-day moving average also weaken gold. In respond technical selling was encouraged. Experts tend to call this phenomenon “death cross”. It is a signal of bearish performance.

Though, many still think that recently weaken gold provides good opportunity for purchase. Fed’s meeting and big investors selling gold in Q4 2012 startled the market recently. In addition Group of 20 countries promise not to devaluation their currencies. The statement came out last weekend and brought more concerns.

Yet the debt crisis in many countries is far from over. We can expect more money printing as well as devaluation of currency for applying some debt control. The printing won’t stop so gold should restore it position while crisis looms all over the world.


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