Gold Prices Receive Welcome Support as Diwali Festival Approaches

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Commodities Trading

: 26 September 2014

After the sharp rally seen on Wednesday, US crude prices posted a slight pullback of $0.44 to $92.45 on light profit taking.

The main culprits were a stronger dollar and a slump in equities which overshadowed worsening news coming from the Middle East.

The fast approaching Diwali festival in India offered some welcome support to gold prices as premiums are expected to increase by the end of October.

The precious metal rose by $4.9 to $1,221.6, with demand for jewellery in the near future expected to remain strong.



Commodities Trading

: 25 September 2014

The US Department of Energy released its weekly crude inventories indicating a surprise draw of more than 4 million barrels, with stockpiles hitting an 8 month low.

That sparked a sharp rally in the WTI which finished $1.17 up at $92.88.

With the US dollar strengthening again it was a no-brainer that gold would remain under pressure, with the market dropping $5.7 to $1,216.8 yesterday.

From time to time the geopolitical troubles might offer the chance for a rally, but overall the outlook for the precious metal remains firmly bearish.



Commodities Trading

: 24 September 2014

Despite a decline in stocks and shares, WTI crude managed to regain Monday's losses, rising $1.00 to $91.71 per barrel.

The support was offered by the US and its Middle Eastern allies launching a series of airstrikes against Islamic State targets in Syria.

This fuelled speculation that oil supplies from the region could be disrupted.

Demand for gold as a safe haven asset was undoubtedly boosted yesterday by airstrikes in Syria which pushed the metal $8.5 higher to $1,222.5.

This may well be temporary support if things don't escalate, but it will still be a welcome respite for gold bugs who must surely be wondering whether the wider market is underestimating geopolitical risk.



Commodities Trading

: 23 September 2014

After China's Finance Minister dampened hope of additional economic stimulus, the energy complex dropped as traders speculated that oil demand could be affected.

As a consequence, US crude posted another sell off, with a plunge in US equities exacerbating the decline of $1.04 to $90.66.

Although gold closed rather flat around $1,215, it reached a new recent low of $1,207.9 in intraday trading.

The precious metal has rallied overnight, but with the dollar on a clear strengthening path one could wonder how long until the gold bears take over again?



Commodities Trading

: 22 September 2014

Despite signs that OPEC might be willing to reduce oil output targets in an attempt to halt price declines, US crude continued to move $0.16 lower to $91.81 per barrel.

This came on speculation that economic growth might inspire the Fed to increase interest rates sooner rather than later.

The usual suspects drove gold prices lower on Friday, with a stronger US dollar and a renewed stock market rally making fresh all-time highs.

The precious metal lost $7.3 to $1,217.2 as demand for alternative assets wilted.


By Jonathan Sudaria, 26 September 2014


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