The December 2014 reading on the overall index on consumer sentiment came in at 93.6, its highest reading on a final basis since January 2007.
It’s important to track the PMI while keeping an eye on the manufacturing index for other economies, usually the ones that impact the US dollar the most.
Gold mainly trades in US dollars (or USD). As a result, a weaker USD makes gold cheaper for other nations to purchase. It increases their demand for gold.
Gold futures rose to an 11-week high on speculation that Greece will abandon the euro. This boosts the appeal of precious metals, including gold.
In this series, we’ll explore factors responsible for the gold price recovery and some factors investors can track to get a sense of gold’s price direction.
High yield bond fund HYG saw inflows peak at close to $4.5 billion in 2012. High yield bond fund flows have turned negative since.
2014 has been a phenomenal year for the US! As the sun sets on 2014, it’s time to look back and study the year in review.
USD strength, oil price weakness, expansionary policies by economies other than the United States. and low inflation could all put pressure on gold prices in the short-to-medium term.
Despite the fall in gold prices, production is increasing, mainly because most mines are long-term. It would hurt mine economics to shut them down in the short term.
Increasing real interest rates could motivate some urban gold investors to move to other investments. But for India’s rural population, gold is an easy, available investment option.
Despite India’s challenges, the value of gold imports increased by ~603% year-over-year in November. Strong physical buying by India is positive for gold prices.
Increasing real interest rates in China will stimulate people to save instead of invest in gold. This is negative for gold prices, gold-backed ETFs, and gold stocks.
Since the end of August, withdrawals from the Shanghai Gold Exchange have been stronger compared to the trend over the first six months of the year.
China doesn’t publish gold import or export data. As a result, we’ll rely on data from Hong Kong’s gold exports to China, which totaled 69.0 tons in October.
Gold ETF holdings have fallen to a fresh five-year low. Recent outflows suggest that investors might be moving into other risky assets such as equities.
Cheaper oil means lower inflation. This means gold should be negatively affected since it’s usually considered a hedge against inflation.
The trend points toward central banks buying gold in time of uncertainties. This should be positive for gold.
When money supply growth is used to prop up the financial and economic system instead of fuel strong economic growth, the price of gold relates to growth of the money supply.
The ratio of debt to GDP also increased from 101.9% in October to 102.3% in November. This is negative for the US dollar’s long-term profile.
The federal debt has exploded since 2008, but the situation is getting better. This should be positive for the US dollar, which should lead to weaker gold prices.