In a continuation of gold’s worst year since 1981, the precious metal reportedly failed to make any gains in its trading yesterday. Many experts have pointed to increased confidence in the rebounding American economy as the source behind the inability to improve gold’s standing in trading. As has been noted in many of the previous reports in recent weeks, on the whole gold has been trading lower, suffering numerous losses as the prospects of the American recovery have improved.
Readers are reminded that gold is considered a haven asset where many investors turn to in the face of downturns on major currencies like the dollar. As the American economy has shown signs that it is in a significant upturn, gold has become less attractive to traders looking for assets with greater growth potential. This shift in demand has been seen in the refusal of many large investors to continue their purchases of gold over the past few weeks.Analysts assess that gold trading will likely remain low over the coming weeks and through the new year.
USD Beats Out Yen on Central Bank Policy
It was reported on Tuesday 24 December 2013 that the US dollar had reached a five year high against the Japanese Yen. According to many experts, they have cited a divergence in monetary policy between the two countries as having led to the American gains. Analysts remind readers of the recent policy shift by the Federal Reserve which lowered the previous quantitative easing measures from $85 billion in bond buying down to $75 billion for the coming year. This has helped to reignite interest amongst investors looking to capitalize on the growth that is being experienced in the US economy. However, for its part, the Bank of Japan appears to have taken the opposite path and is engaging in increased stimulus in an effort to spur growth in their economy. The Japanese economy has struggled with stagnation and is in the processes of attempts.to push up inflation under the economics plan of Prime Minister Shinzo Abe.
Analysts assess that while the process of increasing their involvement in the economy with bond buying and other measures is an important step which may help the country rebound from its current difficulties in the long run, the market may decide to keep punishing the Yen over the near term. Especially as the dollar seems to be on a consistent rise with its series of positive reports in recent months, analysts believe that the dollar will likely continue its dominance over the Japanese currency.
Loonie Enjoys Boost From Monday GDP Report
Investors voiced their confidence in the loonie today following yesterday’s release of Canada’s Gross Domestic Product report that showed that the northern nation's economy had expanded at a respectable rate. Experts following the Canadian dollar’s rebound have pointed to growth in wholesale trade and manufacturing as being instrumental in raising up the report’s numbers.
Analysts note that the loonie has faced difficulty in recent months as the price of its most significant export crude oil has fluctuated considerably. Traditionally, much of the Canadian economy has been affected by shifts to the price of crude. According to reports today, the market listed losses on crude in trading, potentially adding negative pressure onto the loonie.
However, many experts have been voicing their belief that the Canadian dollar may be on an uptrend as 2013 comes to a close. In particular, they cited that costs to insure losses between for the loonie in trading against the USD have dropped in recent days, despite the massive improvements by the American dollar over the past few months. Analysts assess that the market will likely see some positive movement for the loonie in the coming days as it attempts to adapt to the increased demand for the often short sold currency.