Gold shows its teeth

Frothiness in equity markets may well be helping keep gold’s rise on track.

It has been a confusing start to the year for equity traders as the markets have looked to unwind some of the aggressive rally that indices enjoyed in the last two weeks of the year.

This rebalancing of the books has coincided with a number of the voting Federal Open Market Committee members being given platforms to discuss their hawkish outlooks. Today will see both Richard Fisher and Charles Plosser speaking, and both will be expected to endorse an increase to the current tapering of the US debt purchasing scheme.

Also adding to the confusing picture in the US are last week’s non-farm payroll figures. These had a particularly low turnout and look set to suffer a sizable correction when they are revised later in the month.

As Brenda Kelly has pointed out, from a technical view point gold’s price has now comfortably broken through the 50-day moving average, and the precious metal’s ability to close above $1241 for consecutive days hints towards it heading higher still.

Spot gold chart

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.