Market Analysis: GOLD 5/20/2014

Gold Stabilises Due to Fed Comments

Gold fell sharply on Wednesday after the chair of the US Federal Reserve, Janet Yellen, said that the current reductions in monetary stimulus were “appropriate”, given the “underlying strength” of the economy. Developments closer to home also helped cut demand for gold, after Russia’s President Putin appeared to be willing to negotiate a solution to the current crisis in Ukraine.

These factors combined to push gold firmly back below the $1,300 mark to its current level of $1,293 per ounce, leaving it up by just 0.8% on last week’s closing price.

The main route by which traders and investors gain exposure to gold is through exchange-traded physical gold funds such as the $33bn SPDR Gold Trust (NYSE: GLD.US) ETF, which has risen by 0.8% so far this week, and is up by 5.2% so far in 2014. A London-listed alternative, Gold Bullion Securities (LSE: GBS), has gained 0.5% since Friday last week, and is up by 7.2% so far this year.