Gold Price Update: near two week highsOctober 7, 2015 1:46 pm
Gold price update – gold holding to higher price
For this week’s news piece we thought we would go back to basics and speak purely numbers and stats about the current gold price. As I write this, gold is sitting at £751.56, $1,150.20 and €1,020.90 respectively. For the Dollar, we are sitting at near two week highs for the price with the PM fix on the 24th September at $1,154.50. For Sterling and the Euro we aren’t quite at that benchmark, only yesterday we had slightly higher prices for both and before that we only need look to the 25th. Not particularly surprising information.
I think the more interesting analysis occurs when you look before the 24th and 25th September. To see high prices of £750, $1,150 and €1,020 you have to actually go back quite a way. The last time sterling hit the £750 ceiling was back in the 10th July and it tested that price only for about a week. The Euro hasn’t been too dissimilar, it hasn’t hit the $1,120 mark since the end of July, though before that, like Sterling it was performing significantly stronger earlier in July/June. For the Dollar the cycle has been significantly shorter. The price has hit $1,150 far more readily, it hit it a couple of times in September, again in August and in July.
So what is the gold price doing and where is it going?
In truth, a lot of the peaks and troughs coincide with market data: non-farm payroll, weekly jobless claims and most importantly Federal Open Market Committee minutes about rate rises. The markets always tend to sit and trade down before big market decisions. Earlier this year around the July period it was looking likely that a rates rise was on the cards for September – or so the FOMC and Janet Yellen had been keen to publicise. The gold price took a bit of a fall in all currencies towards the end of July and remained lower in August across the board. As is the reality of such things, as the deadline loomed for September rates rise but with continually bad data being announced, the gold price began to increase again as investors flooded back into the precious metal as the rates rise became increasingly unlikely.
Verdict:-The gold price is higher than it has been but now the talk is of a possible December rates rise or an early 2016 rates rise, which could put pressure back on the metal. The sceptic that I am, I’d still be surprised if they go ahead with December. Even if they do, in truth a nominal increase wouldn’t create the waves we are all thinking it might. The market will go crazy for a couple of weeks, that is a given and then the monotonous reality will kick in that 0.25% increase is really trivial. Yellen and her gang aren’t going to raise it if the US aren’t ready – they can’t raise it and lose face by having to drop it again – can they?
Article by Michael Cooper