GOLD FAILS TO BREACH THE $1800 MARK

Last month gold was at an 11 month high. It increased by almost $65 in September following the Fed’s announcement of QE3 launch.

However this week there were mixed sentiments from the market. In the beginning of the week, Gold gained support from ETF buying. Gold holdings with SPDR ETF hit record high level last week and rose for the eleventh consecutive week. Also supporting gold price were the continuing labor problems in South Africa. As per latest reports, mine workers have rejected revised pay offer by gold companies. Tensions could rise in coming days as mining firms may prepare to carry out more mass firings if the strikers don’t return to work. Meanwhile, central banks have continued to take measures to support their economy. 

But Gold failed to breach the $1800 mark.  Spot gold was down 1.2 per cent at $US1720.90 an ounce in late New York trade, after hitting a low of $US1715.79, which marked the cheapest price since September 7.

Gold also notched a near 2 per cent decline this week, its biggest weekly drop in about 4 months. The metal has so far failed to trade above $US1800 an ounce this year.
Gold fell over 1 per cent to a one-month low on Friday, its biggest daily drop in more than three months, hit by technical selling and tumbling US equities on economic uncertainty around the world.

The yellow metal has also been hurt by positive economic data coming out of the US, which means a quicker end to QE3 than expected. QE increases gold's allure as a hedge against inflation amid currency depreciation.

Gold also shrugged off the largely better-than-expected Chinese numbers - third-quarter GDP growth at 7.4 percent on the same quarter of last year was in line with most forecasts but a drop from 7.6 percent in the second quarter.

Moreover, weakening performances from companies like Microsoft etc resulted in a fall in equity markets which in turn showed its reflection on gold.

In other precious metals, silver was last at $32.37-32.42 per ounce, down 45 cents on Thursday’s close, platinum at $1,628.75-1,638.75 was down $9.75 and palladium was $4.20 lower at $636-642.

Now, focus will continue on major economies. For US, focus will be on US economic data and comments from Fed officials. Fed has already announced additional asset purchases which are supportive for gold however economic numbers will give an idea as to how long the bond purchases will continue. For euro-zone, focus will be on development in Spain, Italy and Greece. Market confidence is shaky as regional economies remain under pressure however continued measures by European leaders will limit downside.
Traders are now worrying that without a clear catalyst to push prices higher, gold will continue to drift lower in the coming weeks.

Gold Loses its Glitter

Last fortnight gold reached $1796.5- an 11 month high; following comments by ECB president Mario Draghi that more bailouts maybe approaching. He stated that “euro” is irreversible and that the bank was equipped to purchase the bonds of indebted countries.
Positive jobs figures, which raised hopes that Federal Reserve intervention through a third round of quantitative easing (QE3) will be short-lived, have boosted the US currency, while the euro has been under pressure from news that Spain may resist asking Brussels for a bailout. 

However last week, gold was moving on a slightly lower side- at around $1765 on Thursday morning. A stern warning by the IMF on global economic growth and a slow development of the Chinese economy resulted in this downfall.

On Monday, Gold was down 1.2% at 1733$ per ounce. This yellow metal hit a one week low following news from Euro Zone officials that Spain could ask for financial aid from the bloc.

Heavy fund liquidation and technical selling also pressured gold as data showed U.S. retail sales rose in September after Friday's strong consumer sentiment data. Bullion could see more weakness as investors feared the Fed might curb its stimulus due
to a brighter economic outlook

Gold rose to a 2012 high of $1,795.69 an ounce earlier this month. However, several subsequent rallies to break above $1,800 an ounce had failed and were met by heavy technical selling.

Also weighing on gold was data showing Chinese inflation was subdued in September while exports had rebounded at nearly twice the rate expected, dampening expectations for easing measures in the world's second largest economy.

This week the main topics of discussion are- revised German and French CPI data, Italian Bond sales results, US Q3 earnings and the LME week.

The Italian Bond Sale Results May Spark Euro zone Crisis Fears if Yields Rise. The European Union sovereign debt crisis and specifically the countries of Greece and Spain remain a major worry for traders and investor

LME week is to be held in London whereby the London Metal Exchange holds a series of events and meetings. Moreover, the US dollar index and crude oil prices will have a significant effect on silver and gold prices.

With little practical value, and most supply tied up in central bank vaults, gold is the most speculative commodity of all.

Nonetheless Gold, which is seen an alternative to currency, say investors, has the capacity to drive into tens and thousands of dollars. That’s the kind of appeal gold has.