Gold: A hawkish tilt pressures price below key support level

UNITED STATES November 12 2014 11:32 AM

 

NEW YORK (Scrap Register): Gold prices declined faster than expected recently before rebounding at the end of last week.

 

However, in Barclays view, the scope for rate hikes and a stronger dollar present insurmountable hurdles for gold and although physical demand has picked up, it has not been sufficient to stem the tide of disinvestment. 

 

Given Barclays macro view, risks to gold remain to the downside but ETP holdings could weaken the floor. 

 

Although the end of the asset purchase program was widely anticipated, the hawkish tilt was not, and the gold market again reacted negatively to the prospect of rate hikes. 

 

Gold has struggled to battle a stronger dollar and last week’s reaction underscores gold’s sensitivity to rising rates. It is worth noting that gold prices have fallen below the key technical support level at $1180 an ounce, a support level that has been tested three times since July 2013 and held firm previously.