Those who concerned with the slowdown in gold investment in India can relax a little as it showed signs of recovery yesterday.
A Bloomberg survey showed gold traders are at their least bullish in 14 weeks. Bloomberg attribute this to Goldman Sachs’ earlier declaration that gold had already peaked. However, given this is a survey which looks at the gold market over a number of weeks rather than months or years, it is not surprising gold traders are feeling slightly more bearish given gold’s reaction to fiscal cliff talks which will continue on into the next few weeks. As long as the fiscal cliff discussions continue, we are likely to see sentiment in the gold market and gold bullion investment affected.
Gold bullion investment and political tales
Yesterday the gold price did make some gains as Draghi indicated that there may be a cut in rates next year as the economy looks set to continue to contract.
As Zerohedge pointed out yesterday, despite Draghi’s insistence that ‘significant’ progress had been made, the numbers tell a different story; ‘Euro-zone youth unemployment is at a record 23.9% but Spain and Italy saw the biggest jumps (to 55.9% and 36.5% respectively). Greece remains the worst at over 56% based on last data, while Germany rests at 8.1%.’
As someone said on the BBC’s Question Time last night, we might deal with all this a little better if we didn’t feel we were being lied to and patronised all the time.
Speaking of the UK, the MPC decided to hold rates at the low of 0.5% yesterday and there were no further changes to QE. Some analysts believe the committee is falling out of love with QE and is now favouring its Funding for Lending Scheme (FLS). It seems the MPC has given up on QE boosting demand and is instead relying on the FLS to boost consumer spending through increasing credit and corporate investment.
The UK’s citizens are still muddling their way through the Autumn Statement in an attempt to understand how they have been affected. As we often see after such statements, another think tank or institute has to come along and tell us what it all really means and how realistic it all is. This morning the Institute of Fiscal Studies say that further spending cuts will be seen in 2015, whilst too much fiscal consolidation is coming from tax hikes rather than cutting spending.
Today, look out for US non-farm payroll data which is expected to show a sharp fall in November, thanks to Hurricane Sandy no doubt. Later next week the US Fed will announce its decision on monetary policy, the decision will be interesting given the political pressure over the fiscal cliff.
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About the Author
Jan SkoylesJan Skoyles is Head of Research at The Real Asset Company, a platform for secure and efficient gold investment. Jan first became interested in precious metals and sound money when she met Ned Naylor-Leyland whilst working alongside him in the summer of 2010. Jan then went on to write her undergraduate dissertation on the use of precious metals in the monetary system. After graduating from Aston University Jan joined The Real Asset Co research desk. Her work and views are now featured on a range of sites including Kitco, GATA, lewrockwell.com and The Telegraph. She has appeared on news channels including Russia Today to discuss the gold price and gold investing. You can keep up with Jan’s commentary by subscribing to our RSS feed Gold Investment News.View all posts by Jan Skoyles →