The price of gold declined on Oct. 29, as global market participants responded to a rising value for the U.S. dollar and lackluster data contained in economic reports.
December gold settled at $1,345.50 an ounce at 1:36 p.m. on the Comex division of the New York Mercantile Exchange, Bloomberg reported. This represented a 0.5 percent decline for the day. This contract rose to as much as $1,361.80 per ounce during the prior session. This figure represented the highest value for the future in more than one month.
Gold market less concerned with Fed stimulus
It is important to note that market experts did not cite the outcome of the Federal Reserve’s policy meeting that was scheduled for this week as being important to the price of the precious metal. One market expert even described the Federal Open Market Committee meeting as being a “distraction.” according to MarketWatch.
“The FOMC meeting this week is a distraction with the gold market pricing in something longer term now,” wrote Gene Arensberg, editor of the Got Gold Report. Arensberg noted that the market for the precious metal has hit a “pretty important technical crossroads with gold in the $1,350s.”
He added that “Between $1,350 and $1,375 is [an unknown but almost certain] point of transition where the ‘maybe new bull-market leg’ becomes a ‘confirmed new bull-market leg’, which would invite participation by momentum traders in larger numbers.”
Changing direction of metal
These statements represent a reversal from the importance that market experts have been granting to the role that quantitative easing plays in the price movements of gold. Individuals who want to make money by trading the precious metal might benefit from knowing about this change.
Instead of focusing on the speculation surrounding the outcome of the Fed meeting, market participants noted the climb that the U.S. dollar has experienced lately and how this had an impact on the demand for gold, according to Bloomberg. On Oct. 29, the greenback rose to its highest value in one week against a basket of 10 separate currencies.
“A lack of fresh, bullish fundamental news is keeping buyers scarce,” Jim Wyckoff, a senior analyst at Montreal-based research firm Kitco Inc., said in a report, according to the news source. “The key ‘outside markets’ are also in a bearish daily posture for the precious metals – a firmer U.S. Dollar Index and weaker crude-oil prices.”
In addition to the the role the greenback has placed in lowering the price of gold, it was noted that a key measure of consumer spending declined in September, Reuters reported. Many market participants decided to make use of their recent gains and take profits after being notified of this key economic information.
Some investors have lost faith in gold
It is important to note that the precious metal fell into a bear market in April, and is down by approximately 20 percent for the year, according to Bloomberg. Gold declined to less than $1,200 per ounce in June, and some market experts have openly stated that they no longer perceive the commodity as a safe-haven asset.
This shift in perception that many have experienced is worth being noted by those who want to make money trading gold.