Gold Investing Stalls on USD Strength, Technical Selling Posted by Brian Ford on November 11, 2013
The gold spot price was $7.80 lower at 11am EST than it was at the trading session’s opening, worrying some investors that a frenzy of profit-taking could pull gold coin and bullion prices down further. Spot gold was last recorded at $1288 according to the Certified Gold Exchange ticker, down 0.4% for the day.
The Armistice Day and Veterans Day holidays taking place in Europe and the United States has prevented a massive sell-off so far as trading is at a bare minimum, but since gold investing prices are at three-week lows analysts that a mix of bargain-hunting and selling is a strong possibility.
The factors that could weigh on gold include an anticipated increase in output, the better-than-expected U.S. jobs report and the fact that the U.S. dollar index is walking on air at its two-month high.
On the other hand, Washington has provided zero answers on a long-term budget or debt deal, and an increasing number of countries, China included, have called for the dollar to be removed as the world’s reserve currency. American investors seem especially worried, as evidenced by their consistent certified gold coin buying despite disappointing 2013 gold prices. The demand for gold bullion bars, gold bullion coins and PCGS certified gold coins, combined with the outflows seen in many gold stocks and ETFs, could be an indicator of safety-seeking on behalf of concerned U.S. citizens.
While things such as FOMC meetings, jobs reports and Federal Reserve tapering play a role in the decisions of investors’ minds, history has shown that household investors buy physical gold based more on their view of where the country or world is headed. Institutional investors, on the other hand, have hundreds of billions of dollars to throw around and if markets reverse then they can simply take short positions to cover their losses. Most mom-and-pop investors don’t have such a luxury, and so buying physical gold is their way of protecting and separating themselves from the world’s fiat currency woes.