Gold falls to five-week low

The precious metal looks set to test the support level at $1300.

A combination of factors has seen gold’s downward drift pick up pace and turn into a collapse. It was always the fear that its climb in July and August was not being driven by volume but anticipated fear. Now that disarming talks are set to commence between Russia and Syria, and all parties are sitting around the table, it looks very likely that this will be resolved without the use of force.

If Larry Summers is announced as the man to take over Ben Bernanke’s role at the Federal Reserve, as the Japanese press have predicted, it is likely that we will see a faster shift in policy away from quantitative easing. This has been interpreted as bad news for gold, which is part of the reason that we have seen this fall.

At the same time, although not related, Goldman Sachs has published a report on the precious metal targeting a low of $1040 in 2014. Although not always accurate in its predictions, the company is well trusted and this will no doubt have encouraged many to rethink their strategy for gold.

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