Tag Archives: debt ceiling

Oct 14

Price of Gold Weekly Recap – October 7-11, 2013

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Monday Open: $1,324.50
Weekly High: $1,328.30
Weekly Low: $1,266.70
Friday Close: $1,270.70

Despite the continuation of the U.S. government’s second week of partial shut down, gold did not rally as a safe heaven and instead hit a one-week low. There is a significant amount of anxiety and tension in the marketplace right now over the U.S. government’s inability to pass a budget, and even more tension surrounding the looming debt ceiling negotiations. Analysts say that gold is not acting like a hedge fund because of its bad run the last few months, but if the U.S. defaults on its loans, which is what will happen if a budget is not passed and the debt ceiling ignored, then the U.S. credit ranking will take another hit and the yellow metal will then see more activity.

Monday opened the week fairly stable and continued to operate in a narrow price range into Tuesday. The Republican stronghold and Democratic balking seemed to heighten this week, with each party digging in their heels even more than last. The price of gold did not respond too much to this uncertainty, as there is not yet panic in the marketplace. Russian President Putin and German Bundesbank both warned the U.S. that a continuation of the debt ceiling dilemma will soon start to affect other world economies.

The new Federal Reserve nomination was announced Wednesday, to no one’s surprise. Obama will be aiming to put Janet Yellen in place as the next Chief of the Fed to replace Ben Bernanke in 2014. This is seen as generally bullish for gold, since Yellen, who has served as Vice President of the Fed since 2010, supports quantitative easing programs like Bernanke. However, the news did not move the market.

The end of the week saw prices dip from their general holding pattern. Risk-on attitudes and sell-stops on Friday contributed to the decline. The lack of economic data released in the past week put a halt to a lot of trading, including gold, though Obama and the Republicans seem to be close to signing a six-week long extension on the debt ceiling to pass a budget.

Jan 21

Price of Gold Weekly Recap – January 14-18, 2013

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Monday Open: $1,667.80
Weekly High: $1,694.10
Weekly Low: $1,667.80
Friday Close: $1,684.30

It was a good week for gold. After continued hums in the marketplace questioning gold’s volatility, January is proving to be a bull month for this yellow metal. Gold gained 1.6% this week, its highest move since November 2012. This follows last week’s 0.3% gain, which ended a six-week long losing spree. Speculation still abounds about gold’s true winning capacity, but so far, the market is showing slow but steady gains.

Monday opened with the low of the week and shot steadily upwards through Tuesday. On Tuesday morning, news broke that platinum was trading higher than gold, a rare phenomenon that last occurred March 2012. Platinum hit $1,702 while gold stayed around $1,682. Platinum rose largely due to the halting of some major mines, increasing desire for the metal. Gold responded little on Tuesday, but as platinum hit its seventh bullish day on Wednesday, gold did take a little drop.

Thursday’s drastic price fall can be attributed to the U.S. weekly jobless claims report, which was significantly better than expected. However, gold quickly rebounded a little while later in the day after U.S. manufacturing data revealed unexpected contraction.

Though the fiscal cliff crisis has passed, Credit Suisse analyst Tom Kendall pinpoints the U.S. debt ceiling as a major factor for gold. He assesses the situation as being positive for gold, since the U.S. faces downgrades from credit agencies, and thus a stronger investment in hedge funds. It will also get people thinking about the long-term value of the dollar, which will most likely turn out to be bullish for gold. The debt ceiling debate is on the horizon for the end of February.

Friday consolidated the week’s gains to end on a high note. Amid the trading activity this week, a few major investment companies added further speculative projections for gold in 2013. The projections vary drastically, as Goldman Sachs downgraded its 2013 gold prediction to $1,200, while successful gold producer Iamgold upgraded its projections to $2,500. Falling smack dab in the middle, metals consultancy firm GFMS predicted a bullish year for gold, anticipating $1,900 in the first two quarters. This firm cites strong demand from central governments and increased buying from India and China as factors for growth.

Despite hesitation in the market, the overall sentiment still maintains a positive light. Analysts at UBS, a Canadian financial firm, summed up Friday’s gains by stating, “The physical market is off to a good start this year, with many indicators so far pointing to a positive demand story.”