Gold Price this December – what’s in store?
Gold Price this December – what’s in store for the rest of the month?
Finally it is December and we are into the home straight to Christmas and the end of the year! November went quickly enough and I don’t begrudge the month before Christmas – we had Guy Fawkes’ Night, Diwali, Thanksgiving (if you’re American), Black Friday and Cyber Monday – I really cannot complain despite not cashing in on discount prices. But for me there is always a feeling about December I can’t quite shake. I guess it is the knowing that holiday is coming and it is another year to chalk up. It may also be that I’ve rather boldly brought out my Christmas jumper immediately upon entering December and am having to justify it to work colleagues. Whatever it is, I get all doe eyed about the thought of snow, mulled wine and terribly dressed trees that have no real reason to be taking up half the living room. Sadly for me, gold waits for no man – except forgotten hoards at the bottom of the ocean. So what is in store for the gold price this December?
The gold price this December is nearing the lows it achieved in August this year, which until then hadn’t been achieved since February 2010. With talks of interest rate hikes and the FOMC still on the path to raise rates before the end of the year, the gold price this December may well re-test the lows we saw earlier in the year. The reality of the rates rise will for the short term mean the ETF’s may well short gold and the gold price in Dollars will likely go down if the rates do actually rise. For the UK, the gold price should be met with greater resistance. The fallout from an interest rate hike in the States will inevitably lead to a stronger dollar against the pound, which will help to keep the gold price from falling too far in sterling.
Other than the never-ending debate about the rates rise, the gold price this December and for the rest of time, will always be subject to other world events:
The horrific recent events in France and the subsequent escalation in Syria, has led to a UK vote in the House of Commons today to decide whether the UK will join the coalition in bombing Syria. As with the Ukraine – Russia conflict last year, military action sadly tends to keep the gold price high, as businesses with larger operations overseas will use gold to hedge against uncertainty. Likewise another bi-product of war is the use of precious metals which again is likely to keep commodity prices on an even keel.
Consideration has also to be given to global economies and financial data, in particular any news from China will be highly scrutinised. Likewise information released from the Bank of England and European Central Bank will be closely followed. What will be interesting is the data published following commercially driven Black Friday/Cyber Monday sales and also December Christmas sales. That will be a good indicator as to whether consumer spending reflects the moderate economy recovery central banks analysts lifelessly cling too. We’ll have to wait for that.
Verdict:- The gold price this December as has been the case for the last year, is dependent on the FED’s rate rise and whether it falls this year or early next year. Ultimately it is all elementary, gold’s main asset has always been as a form of hedging and that will never be redundant. What determines the price of gold is everything and anything. Expect the unexpected.
Article by Michael Cooper