Tags: Ash | price | dollar | gold

BullionVault's Ash: 7 Factors' Impact on Gold

Thursday, 07 Aug 2014 07:35 AM

By Dan Weil

  Comment  |
   Contact  |
  Print  
|  A   A  
  Copy Shortlink
Gold has traded up and down between $1,250 and $1,350 an ounce for most of the past six months, and market participants have mixed views about where it's headed.

Writing in The Telegraph, Adrian Ash, head of research at gold trading platform BullionVault, examined the relevance of seven factors often seen as determining gold's direction.

1. Inflation. In the past gold, tended to rise when inflation did. But gold soared from 2001 to 2011 with inflation under control.

Editor’s Note: New Warning - Stocks on Verge of Major Collapse

2. Interest rates. Gold pays no interest, so you might think that higher rates would hurt gold. But, "gold prices and interest rates have moved in opposite directions only half the time since 1969," Ash writes.

3. Stock markets. Similar to interest rates, gold has moved in the opposite direction of stocks in just 48 percent of all 12-month periods since 1969, he says.

4. Geopolitics.
Gold tends to rise for short periods after news of turmoil.

5. The dollar. Gold moves in an opposite direction to the dollar 60 percent of the time.

6. Oil prices. Gold and oil prices have moved in synch a bit more than 60 percent of the time in each of the years since 1986.

7. Asian demand. "Asian demand clearly follows prices, rather than setting them," he writes.

"What might boost or reduce the flow of investment money is a combination of all the factors above. But at root, long-term rises or falls in the gold price reflect a broader anxiety — whether about politics, the value of money, or the outlook for other, typically more productive assets."

Gold for immediate delivery lost 0.1 percent to $1,305.05 an ounce by 9:07 a.m. in London, according to Bloomberg generic pricing. It reached $1,309.52 Wednesday, the highest since July 29. Gold for December delivery declined 0.1 percent to $1,306.30 on the Comex in New York.

"Gold is getting the fear bid," Charlie Bilello, director of research at Pension Partners, tells Bloomberg. "Concern about a correction in the equity market is also bringing some people to gold."

Other experts see the situation remaining volatile.

"There are a lot of crosswinds going on for gold," Deutsche Bank's global head of commodity research, Michael Lewis, told Reuters. "You have long-term U.S. real yields going down to new lows and geopolitics, which should be supportive, but on the flip side you have dollar strength coming through and equities hitting new highs."

"Those various forces are working against each other, which is maybe why we're still in this rangebound market," Lewis said.

Editor’s Note: New Warning - Stocks on Verge of Major Collapse

Related Stories:

© 2014 Moneynews. All rights reserved.

  Comment  |
   Contact  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
You May Also Like

OPEC Rocked by US Fracking, Can't Cut Production

Thursday, 27 Nov 2014 14:23 PM

OPEC took no action to ease a global oil-supply glut, resisting calls from Venezuela that the group needs to stem the ro . . .

Toyota Recalls More Cars for Dangerous Takata Air Bags

Thursday, 27 Nov 2014 14:26 PM

Toyota Motor Corp. recalled more vehicles in Japan on Thursday as part of a worldwide scare over defective air bags and  . . .

Harvard's Feldstein: Low Oil Prices Help US as Iran, Russia Suffer

Wednesday, 26 Nov 2014 16:30 PM

Harvard economist Martin Feldstein says "the low price of oil is good news for the United States economy, because it imp . . .

Most Commented
Top Stories

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved