Gold, which started the year on a negative note, regained some lost ground during the quarter ending in
September. Statements supporting continuation of stimulus measures in US and tensions mounting in Syria crisis were the major factors which helped gold post gains in the quarter. The economic data from the US has been strong since the start of 2013. This lead to heightened expectations around tapering of stimulus measures by US Fed. The stimulus measures are considered beneficial for the gold prices. Gold had one of the most prolific periods between sep 2008 and dec 2012 on the back of stimulus packages. However, with the increasing positive signs in the US economy since start of 2013, the Fed also revealed its plans to roll back its stimulus packages. This helped the equity markets perform better and gold markets took a hit.
With the positive data on addition of jobs during the month June coming in, gold continued to be in pressure during the start of the quarter. Dollar continued its dominance as a currency and investors still preferred green back over yellow metal. However, it bounced back in the second half of the month of July with expectation for demand from China and Fed statement supporting continuation of stimulus packages.
The uncertainty tapering of stimulus packages by Fed and strong manufacturing numbers from China
prompted more demand for gold during the month of August. It was also well supported by the rising tensions over Syria crisis. Yellow metal has hit its peak price of the year, as US and its allies rolled out plans for a military strike in Syria. These factors increased the demand for gold which is considered as safe haven against political uncertainties.
Yellow metal started the month of September on a volatile note. The lack of conclusive news about Syria kept the investors away from taking fresh positions during the first week. The positive economic indicators in the form of lessened jobless claims in US increased the expectations over cutting back the stimulus packages. Gold also posted losses during the FOMC meet week. The last two weeks of the month have been lull. Decreased physical demand on the Asian front and uncertainty over Fed’s decision has made the yellow metal range bound.
Written By Arthayantra