Gold fell sharply to a three-week low in early U.S. trading on Thursday on technical selling pressure.
According to a report by Kitco News, near-term chart postures for the gold and silver markets have created new selling pressure. Given that there is a greater appetite for risk in the market, it’s been a bearish factor for gold as a safe haven.
The price of gold reached $1,334 per ounce on the Comex, while spot gold was at $1,334.25. December Comex silver last traded down $0.712 at $22.46 an ounce.
Despite the easing of short-term pressures, long-term signs appear to remain positive for gold. Physical demand for gold is up in Asia, with China’s appetite for gold promising to help it surpass India as the world’s largest gold consumer before the year is out, based on data from the World Gold Council. Additionally, gold mines in South Africa, Australia and other high producing countries have been shuttered or mothballed, guaranteeing that the supply of gold in the coming years will decrease.
In the short term, the possibility that U.S. intervention in Syria may be not happen, resulting from a Russian plan to place Syria’s chemical weapons under international control, also served to reduce the level of short term fear in the marketplace.
“Many traders and investors are looking ahead to next week’s meeting of the U.S. Federal Reserve’s Open Market Committee (FOMC),” wrote Kitco News. “A slight majority of the market place believes the U.S. central bank at next week’s meeting will announce it will begin to scale back, or “taper” its monthly bond-buying program. For the past several weeks the market place has been fixated on what the U.S. central bank will announce at the conclusion of next week’s FOMC meeting.”
Long term investors, who value physical gold’s likelihood to escalate in value over time, as the supply wears thin, have buoyed the market, taking advantages of the decrease in the price of physical gold.