FX Traders horrid over Gold Futures Decline
November 1, 2013 – Gold futures were lower on Friday because the Federal Reserve may begin tapering its bond-buying program sooner than expected which sent the dollar higher.
The Comex division of the New York Mercantile Exchange, the gold futures scheduled for December’s delivery which traded at USD 1,313.40 a ounce during the European session. It raised 0.78%.
There is some positive news that gold will find support at USD 1,294.90 an ounce, a low from October 9 and resistance at USD 1,341.90. Thursday’s high respectively.
The Chicago manufacturing purchasing managers index suggested that the dollar found support Thursday jumped to 65.9 in October up from 55.7 in September. Our analysts had expected the index to decline to 55.0 this month.
A report for the unemployment assistance applications fell broadly in line with market expectations last week.
The Department of Labor stated that the number of individuals filing for initial jobless benefits declined by 10,000 to 340,000 last week. However, ITFX’s analysts expected jobless claims to fall by 11,000 to 350,000 last week.
The Fed is still not clear in their USD 85 billion asset re-purchasing program’s scaling back date and there is no indication when that will commence.
Therefore, a stronger dollar will reduce the demand for raw materials as an alternative investment and priced commodities more expensive for other holders of currencies.
The Dollar moved slightly higher versus the yen on Monday, however the limited gains stalled the improvement of the economy and the impact of the U.S. government worried FX traders across the globe. This will stall the Federal Reserve’s plans on the stimulus measures.
After a horrid report from Japan’s trade deficit of JPY 932.1 billion in September, the yen dropped and seeking stabilization.
The Dollar received another boost after Japan’s Governor, Haruhiko Kuroda’s statement on Monday that the bank will continue its stimulus program and it will maintain its 2% inflation target.