UNITED STATES March 25 2014 4:35 PM
NEW YORK (Scrap Register): Gold benefited from a continued safe-haven bid last week as China weighed on market sentiment, adding to the weight placed on sentiment by the Russia-Ukraine conflict.
Gold prices hit levels last seen in September of last year. Beyond the near term, Barclays does not expect this safe-haven bid to linger and, thus, believe that gold will likely move lower as a result. A stronger dollar could represent a hurdle for gold this week, especially if USD-supportiveness emerges.
Intraday gold prices fell during the last week, from over $1380 an ounce (/oz) to below $1330/oz. The safe-haven bid that drove it to its highest since September 2013, did diminish earlier last week, but fears have resurfaced and cushioned prices on the downside. Applying downwards pressure to gold this week was the Fed.
The FOMC tapered its asset purchases by $10bn, as widely expected, and replaced the 6.5% unemployment rate threshold by saying “In determining how long to maintain the current 0-0.25% target range for the federal funds rate, the Committee will assess progress – both realized and expected – toward its objectives of maximum employment and 2 percent inflation.”
The expected USD strength as a result of the more-hawkish-than-expected FOMC statement and its own policy rate forecast presented an additional hurdle for gold, as has recent equity strength.