Gold Prices edged higher,
but gains are limited
28.08.2014
Gold rose for the third
consecutive day today on the retreat of the US dollar and increased tensions between Russia
and Ukraine, but the yellow metal remains
under pressure on firmer US equities and
the speculations of U.S. interest rate
hike sooner than expectations.
* Gold extended gains:
Gold prices extended gains for
the third day in a row hitting its
highest level in a week amid the decline of the Greenback against most major currencies within a correction step. In addition, the investors turned to invest
and buying the metal as a safe
haven asset after the resumed tensions between Russia and Ukraine. In fact leaders in Ukraine charged that Russia was deepening its
intervention in Ukrainian territory by sending new troops to the south-east
border.
*Gold remains under pressure:
The Gold prices recovered, however it did not succeeded
to break through the psychological level of $1300 per ounce to the upside , on
speculations that rising US interest rates can affect negatively the gold
prices. Furthermore, if the interest rates rise, consequently the yields on
bonds and cash in the form of money-market funds will also rise, which will
make bonds and cash more attractive to investors than gold.
On the other hand, the
strong U.S. economic data
will limit the Gold gains, for example: today the market has witnessed the release
of the US
GDP data, which rose more than forecasted to 4.2%, while the Initial jobless
claims declined to 298K.
These data have
decreased the demand for yellow metal, while pushed the dollar index high.
Moreover, the expectations
of more stimulus measures from the European Central Bank has weight on the yellow
metal, and by contrast it boosted the demand the U.S. dollar and equities.
As a result, the demand
for the Gold is always based on the economic data as well as the geopolitical tensions
around the world, which can determine the future market movements.
