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Down
Explanation
Up
Explanation
The doubts created by several factors (i.e. health of the global economy,
rethink of U.S. recoverys strength, and the prospect that the Federal
Reserve would delay any increase in U.S. interest rates) brought a halt to
the dollars 12-week winning streak, according to the ICE Dollar Index. As
a result of this decrease in dollar prices, in combination with the markets
heightened risk aversion, the demand for gold increases, partly because it
is considered as a safe haven against the uncertainties present in the
market, and partly because it is now cheaper to buy gold since it is
denominated in dollars. Given these, the price of gold is being pushed
upwards.
Down
Explanation
The US stock market has regain its position due to strong third
quarter earnings as demonstrated by percentage gain of S&P 500
and Nasdaq. Stocks recovers from recent downdraft of four weeks
decline.The gain in stock market, in return, will push the gold price
down. Gold and stocks tend to move in opposite directions because
gold is regarded as a store of value while stocks are regarded as
return on value.
Overall Position
Forecast over the evaluation period: Down
Based on our analyses above, gold prices are expected to decline in the coming week.
Although the weakening of the dollar pressures the prices to rise, both the gain in the US stock
market and the higher yield or interest rates drive the prices to go down. Positive outlook on the
US economy led to lower US Treasury prices and increased investor assurance which results to
less reliance on safe haven assets like gold. Also, the turnaround in the stock market after its
recent downdraft further push the gold price downwards.