- Fundamental Analysis
- Technical Analysis
When there is panic in the market, smart money move toward the risk-averse derivative, which is what is driving the gold price higher. The emerging-market crisis on the back of Fed tapering is also working well for gold traders.
There is a serious money flow, from the equity market toward gold, and we think that this could continue for the next couple of weeks. Having said that, if we have actually seen a bottom for gold, this could be a far fetched idea. Because, the GDP data released yesterday, in the US, vouched that the recovery in on track (meaning less demand for risk averse derivative), and with 10-year US bonds yield declining due to an increase in the demand for the safe haven (on the back of emerging market crisis), we think, that the Fed may use their intuition and actually take this opportunity to wind down their QE emphatically.
Inflation Creep
Thus, a diminution in the 10-year US bond yield could translate into an increase for the mortgage market. And if we see inflation creep, we may call a bottom for the precious metal.
