The gold bulls still have some hope that the price will return to the positive mood of 2011, as it clings onto the gains made after the Fed failed to start the tapering process. The fact that the Fed stated so categorically that economic data will be the catalyst for tapering means that, regardless of markets’ expectations about dates, calendars are irrelevant.
Even with the disappointment of the last couple of weeks, gold still looks set to post a solid return on the quarter, having risen around 8%. Of course, the year-long picture still leaves plenty of room for improvement, as the metal is down around 20% from January.
The question of where next for gold really depends on many of the world’s macro issues. Continued haggling in US politics and the knock-on effect of further delays in the tapering process could well help. However, with considerably more constructive conversations taking place between the US and Iran, general sentiment should improve.
Physical demand looks set to continue from China, the biggest growth market. However India, the largest existing market, is still trying to stabilise its currency and may well take further measures to prevent citizens from converting rupees into gold. As ever, there are more questions than answers.