USD strength, Greek talk’s breakdown and Chinese New Year gifts push investors from normal Gold safe haven.
The three day Gold rally snapped on Tuesday backing off from Monday’s highs of 1236.37 to 1220 by Tuesday 9.00am GMT.
One reason for the rise and fall is the large amount of purchases made by China’s consumers for gold gifts on the Chinese New Year. As the second largest buyer in the world, Chinese demand had pushed the price of the metal up but analysts predict that gold will fall even more when the week long holiday concludes and trading commences once again.
The strength of the US dollar has also played a large role in the precious metal’s fluctuation. In the dollar dominated gold market, the strong greenback makes gold more expensive as the dollar gains advantage over other currencies. In anticipation of a rise in the U.S key interest rate early this year, the American economy is growing but the backlash comes in companies’ export figures and gold prices.
Meanwhile, in Europe, the breakdown of bailout talks between Greek and European leaders happened on Tuesday. Whereas this would normally drive investors to safe haven such as gold, markets seem to be looking further ahead than immediate political rows, to a time when deals will be made to stop Greece leaving Europe; an eventuality that the markets seem not to be contemplating at present.
MT4 chart: XAUUSD [Gold]
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