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    Gold – What is taking the shine off?

    The precious metal had too many news to digest but certainly one news has made an impact on its trading action recently.

    Greece
    The saga continues and there are additional rumours in the market which are in favour that perhaps a common ground will be recognized and both sides will be able to break this dead lock situation. The datum is that there is no official statement of any resolution and both sides are dragging apart more, but it is ludcaris that despite all of this, market is not paying much attention to this and this is the reason we are not seeing any upward move for gold. We do know that every time we have threat or fear in the market, bulls will take the metal rally towards the peak. As long as there is no substantial development on this affair, we do not expect this will have any meaningful impact on gold price.

    Ukraine and Russia
    The ceasefire! Have we not heard the word before? Of course, all the previous ones have failed, and today’s renewal of vows between Ukraine and Russia to keep the new ceasefire established, is as strong as line in sand. This is the reason when this story actually hit the wire, we have not seen any sell off for gold. For investors it is action which speaks louder than words, and they have their doubts about this new ceasefire and how long will it last. Under the txt book theory, this news represents a more peaceful and certain environment, and leaves no reason for you to not to take the risk, so demand for the metal should be negatively impacted.

    US Economic data
    In our morning notes, we said “We think that today’s retail number could once again print another negative reading today given that consumer spending is still suppressed” and this is the main news which has ignited the firwork for gold traders. What we expericned was a huge move towards the upside with a gap, this mainly takes place due to the reason that there are more buyers in the market than the seller, and hence, the price has moved up very sharply. This what really happened! The retail data was as bad as it could be, and I always say that the retails data is the most naked form of consumer confidence. If I am gauaging the consumer confidence, I look at the retail numbers, as this gives the real picture in black and white with no noise.

    Investors are cautious in taking the risk, atleast for now. Although, the unemeployment data has also printed the reading above the 300K, a negative news, but we believe that many have ignored the today’s unemployment claims data and have kept their focus on the US NFP data, which clearly paints a very rosy picture for the US jobs economy. If the job market is strong, it should stimutlate investors to spend more, but this is not really taking place, so my view is that there is something else cooking under the lid, and unless we get to the bottom of this, retail sales number may remain dipressing and this could keep the lifeline on for the gold demand.


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