U.S. equities traded lower for the third consecutive trading session in 2014. This is the worst start for stocks since 2005. Nikkei was trading down for a second day on Tuesday. European stocks is going in the opposite direction. All the European indices is green right now.
The predictions about gold is mixed. Some hedge funds are buying gold now, and they are very bullish on this precious metal. Other market makers are bearish and say the price will fall down to about $1000.
Goldman Sachs in New York expect the gold price to decline to $1050 at the end of this year 2014 (report from Nov. 20). Gold prices increased from December 2008 to June 2011 as the Fed expanded its balance sheet through debt purchases. The interest rate was low and it was in a U.S recession. They did all this because they wanted growth. The record of the Bullion was $1,923,70. A record reached in September 2011.
We are probably at a crossroads here. Fed will start to purchase bonds to $75 billion (from $85 billion) this month. The Fed will try to reduce its QE in $10 billion increments over the next 7 meetings. The program will hopefully end in December.
It is probably best to sit and wait and have a look at the inflation before any decision on gold is made. The precious metal is still trading above $1200 which is a strong support.
News today: Trade Balance at 8:30am.
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Ket Garden
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