During the past month, market participants saw the surprise strange and incomprehensible, strange behavior in one of the safe-haven assets at all. During the political crisis, which lasted 16 days in Washington, gold fell from $ 1417.15 at the end of August, to 1281 dollars at the beginning of last week. And known gold decreased by approximately 10% before reaching resolve the crisis.
Amid growing likelihood of helplessness for payment by the United States , surprised investors and speculators constantly unexpected downside for gold. After all, that were not a crisis the United States a reason for the high price of what gold can do so ? Ironically, with growing concerns about the inability of the U.S. to repay its debt and a possible economic crisis making it safe assets such as gold getting more value , dropped the price of the latter by 10 % . But the mystery is not in retreat in the midst of the crisis , but in the U.S. rise to $ 48 after reaching a solution to the crisis , what form of puzzle with investors.
We must analyze the behavior of gold as a subject for the interaction of many complex factors .
Let’s start with the downward trend of gold, which is a safe haven during crises , during the closure of the U.S. government , which lasted for 16 days. Above all , you should know why the price of gold rose dramatically from the crisis of 2008 , from 700 dollars to 1920 dollars in 2011 , an increase of 174.28 %
Behind the rise in gold on world markets was basically : inflation , it was taken for granted that the quantitative management policies of central banks across the world, will increase inflation across the world , and therefore the only defense for investors is owning assets ” solid ” and the most prominent of gold .
But in spite of mitigation policies , we still see a weak recovery of the U.S. economy accompanied by a silent inflation over the past five years . Most of it, with the ” unrelenting ” Obama candidate for U.S. Central Command , there will be no withdrawal of the asset purchase program sooner. In general, gold is a way to invest at zero interest , so long as inflation is non – existent gold will not attract the attention of investors .
But not only inflation , which make Gold falls . Where he also affected by the depreciation of currencies in emerging markets , especially in the last year , making dollar – denominated commodities difficult acquisitions in local currencies . And thus alienated investors of gold boiling the opposite of what it was previously . It is important to note for that matter, the emerging markets crisis that has made governments take measures to curb capital flight try to limit the decline in the value of local currencies , for example , the Government of India to impose too many restrictions on Estrada gold bullion .
With regard to the sharp rise of gold after reaching an agreement to resolve the crisis the U.S. , we can say that this proves the scenario that we talked about , in a nutshell , investors were centers selling the precious metal , with Systems speculation, the launch of stop loss orders and to cover up the centers sales , led to a sharp rise , given to the Commission data commodity Futures Trading between October 9 and 16 October will see two things illustrate the picture: open-ended contracts for gold in Comex during this period show a sharp rise nearly 9000 contract, the precious metal fell by 6% , we conclude that this rise during this time due sales centers to speculators. It is what supports the aforementioned speech that the sharp rise in the price of gold not only on sales operations .
The ball is now in the court of the players in the market who must come to grips latest economic developments and caution statements issued after the return of the U.S. government to work, that interest in gold also appeared to increase . Goldman Sachs previously stated that gold could fall sharply after reaching the U.S. to resolve the crisis , and expect its price to come down to the level of $ 1,000 an ounce. And therefore investors should analyze what is happening behind the scenes . Apart from the above – mentioned reasons , the direction of the dollar will be an important catalyst for the movement of the precious metal .
My personal conviction is that the opposite direction of gold over the past two years is approaching its peak , but the downward trend did not end after the session . Thus, speculators and investors not to fall into the trap again if the price of the precious metal fell to the level of a thousand dollars . , Which will provide an opportunity to enter a purchase value , and should not be affected by the display dolls between Democrats and Republicans. Since 1982 , the United States government closed 5 times , and four times out of five markets jumped higher after reaching a solution, and only once and did not rise . The bottom line is , why is not the Tea Party or health – care policies for the Democrats , but the U.S. Federal Bank , and as long as the latter are present , then the speculators anticipate their games .
Writer: George Pavlopoulos
