Central bankers are facing the most difficult task: balancing the economy which is on the verge of deflation, or pumping it with cheap money to reflate the stitch-up economic bubble? Worryingly, there is no other option at hand and more negative interest rates in developed economies are looking likely in the coming months (especially in Europe).
Meanwhile, the U.S. economy (dubbed the Promised Land) continues to spur on the relentless task of spearheading growth and potentially raise interest rate for the first time. Analysts reckon that the Bank of England is running second on this issue too.
The big question that many precious metal investors had in mind: when will we see the trickle down event starts going into commodities again? To be fair, the last precious metal bull run was on the back of cheap money printed by the U.S. government and this quantitative easing baton has been passed and replicated elsewhere such as Japan, China, Russia and Europe. Precious metal prices in other currencies have managed to make all time high and will continue to do so for a while. The momentum in XAU/USD looks ominously lower as the Fed looks to tighten in 2015. There is no denying that it will eventually happen and trading XAU below $1,050 is looking more likely.
The next few months will be crucial for the U.S. dollar and stock market bulls. 2015 has been a promising year for more than just a black swan event and at the speed it is going, it looks like there are MOAR around the corner.
Gold Technical Outlook
Gold registered a low at $1,142.67 per ounce and bears continue to hold the upper hand. Only a break and close above $1,195 will neutralise our view but anything below this are selling opportunities. Weakness in USD gave rooms for short covering and current price action suggests a pause by the sellers. This week, we will see a higher rebound of sort but wary of this bear trap!