Investors Look To FOMC Meeting For Direction In Gold
Los Angeles CA, (Tangible Investments) - by James O’Dell - The Gold price rebounded to $1,233.80 an ounce in early trading on Monday as bargain hunting and short covering kicked in after the precious metal dipped $11.50 or 0.93 percent on Friday to finish the week at $1,229.00 an ounce, a near eight month low. The dollar was stronger on the belief that the Fed might raise interest rates a bit sooner in 2015. Silver slid $0.06 or 0.32 percent to close at $18.65 an ounce, while the Gold/Silver ratio, the measure of the number of Silver ounces needed to buy an ounce of Gold, fell to 65.90.
Investor focus now turns to the two day Federal Open Market Committee (FOMC) meeting starting on Tuesday, and some feel this meeting could be pivotal to the shorter term price of Gold. Trading last week began with the announcement of a poll showing Scots were preparing to vote to end Scotland's 307 year union with England and Wales as Great Britain.
A vote to break its bounds with the United Kingdom when Scotland votes for independence on Sept. 18 will be followed by negotiations with London over the new independent nations' portion of the combined assets, including the pound and North Sea oil. Scotland could also claim its part of the U.K.’s 310 ton Gold reserves. “The distribution of the UK’s assets in the event of Scottish independence would be subject to negotiation between an independent Scottish Government and the continuing UK government,” said a United Kingdom Treasury spokesman last week.
Geopolitical tensions in the Middle East and Ukraine have strongly underpinned Gold this year, so the recent cease-fires in Eastern Europe and in the Gaza Strip have prompted some unwinding of safe-haven positions, but these crises are a long way from being resolved. Tensions can escalate quickly and at the moment there appear to be an abundance of clashes that could ignite into regional conflicts at any time. With Gold presently trading on recent lows, buying physical Gold at this time could turn out to be a wise decision in the longer term.
Festival season is beginning in India, and it's a time when Gold sales will typically spike in one of the world’s top precious metals markets. The Indian Gold market is expected to flourish this year with sales bolstered by the festival and wedding seasons. Estimates of current demand in India's Gold industry gleaned from the harvest celebration that took place in the southern region of India on Sept. 7th, show that demand has increased between 15 and 20 percent year-on-year in terms of sales and footfall, according to Rakshit Ranjan of Ambit Capital.
Meanwhile, the Shanghai Gold Exchange (SGE) is set to launch its international board on Sep. 29, a move that is seen as a way to open China's burgeoning Gold market to foreign capital. The board may also be China's attempt to dominate the global Gold market since China is not only the world's top Gold producer and consumer, it feels that it lacks adequate clout in its pricing. "This is our window to the world," said SGE's Shen Gang on Thursday.
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