Gold edged down as trading opened in New York today. Stocks and the US dollar on the other hand steadied ahead of minutes from the Federal Reserve Committee meeting and this weekend’s G20 meeting.
Gold has had a patchy month. The yellow metal look to be headed for a downward trend, but pulled back over the last few weeks and a positive outcome today will see gains in precious metals for the third week on the bounce.
Positive figures from the US revealed an improvement in factory output – its best return for almost four years. Following several weeks of disappointing economic data from the US, these latest figures indicate the world’s largest grossing economy is moving in the right direction and will restore confidence in equities.
China on the other hand has had another slow month of activity which has raised concerns over the growth of the global economy. Traders are showing concerns the recovery is slowing down although that is to be expected following two months of seasonal interruptions in various places around the world.
Another slow week for equities in the Eurozone indicates there is some uncertainty about the global economy among European traders. France and Germany have all reported growth and are propping up the strength of the Euro. UK sterling is also performing well and is attracting plenty of international investment following a political push.
Euro traders however are showing concerns over the Fed’s decision to taper their bond-buying process. New chairwoman Janet Yellen may have to face questions from concerned finance ministers and central banks when delegates meet for the G20 talks in Sydney on Saturday. There is already a degree of tension between the US and emerging economies.
A rebound in gold also indicates traders do not have the share the faith in US recovery as the Fed. Gold futures for April delivery gained $6.40 amidst a scramble for physical gold. Precious metals are still an attractive hedge against uncertain stocks. Having risen to all/time highs, stocks and shares do not look a good investment right now.
Precious metal prices likely to fall
Gold and silver prices hang in the balance. But this is a natural turn of events as the economy turns itself around. Times of uncertainty are to be naturally expected, particularly with so many world events influencing financial charts. The unrest in Ukraine and Venezuela will be monitored with interest over the coming weeks.
But the greatest influence on gold prices is the economy, and with growth expected to improve in both China and the US, market sentiment will turn towards equities and push gold and silver prices down. 2014 promises to be a good year for investors to add precious metals to their investment portfolio.
Analysts anticipate gold prices could fall below the $1,100 mark, which will be a great time to invest in gold, particularly has the yellow metal has the potential to breach $2000 the next time it enters a bullish market – which considering the fragility of the US debt ceiling may be sooner than we expect or need.