Will the Gold continue its bearish wave??
05.28.2014
The
Gold extended losses hitting its lowest level in near 4 months, and erased the
gains which has achieved during first quarter of this year. The sharp decline
of the Gold prices is due to some main political and economic factors.
1/ Eased tensions between Russia
and Ukraine
The
eased tensions between Russia
and Ukraine
tenured calm to the markets, especially after the victory of the Ukrainian
billionaire Petro Poroshenko in the presidential elections last Sunday. Additionally,
the Russian president Vladimir Putin has expressed his willingness to deal with
him concerning the Ukraine
issue.
2/ The improvement of the US economy
On Tuesday the U.S. economy
witnessed the release of better than expected data which have pushed the U.S.
dollar high against its major currencies and precious metals. These data have reinforced
the improvement of the U.S.
economic growth during the second quarter of this year, which will allow the
Fed to implement constantly plans to reduce its bonds buying program.
3/ The decline of China demand for Gold
The
yellow metal demand has decreased in China, the largest consumer of the
Gold in the world. In fact, China's gold imports from Hong Kong fall during the month of April to 64.5 tons,
lower than the imports of the previous month which was of 86.0 tons.
4/ The increase of risk appetite:
The
recent US
economic figures showed that the world’s largest economy has maintained its
recovery. And the investors risk appetite has also increased on the recover of
the US
equities, which hurt the safe haven appeal of the precious gold.
All the mentioned factors have contributed to the lower demand
for the yellow metal, and the question that should be risen now is: “will the Gold continue is bearish
wave, or bounce up again? “
