Nightmare for GOLD?

By: Muhammad Numan

Gold prices drops as U.S. Economy strengths most since the end of 2011.

After reading the below article, I think I should buy GOLD and holds it for at least 2 Months. No doubt that for now Dollar have the upper hand but I think we will see prices going upward again in the coming quarter. GOLD will come out from this Nightmare soon.

Gold fell after a government report showed that the U.S. economy gets stronger last quarter at the fastest rate since 2011, crimping demand for the metal as an alternative investment.

US GDP rose at a 4.6 percent annualized rate, compared with an earlier estimate of 4.2 percent, government data showed today. A measure of inflation, which is tied to consumer spending and strips out food and energy costs, climbed at a 2 percent annualized pace. Yesterday, gold touched an eight-month low.

The metal is headed for the first quarterly loss this year surrounded by low inflation and bets that the U.S. recovery will prompt the Federal Reserve to boost interest rates before its glance. According to the Bloomberg Spot Index, the Dollar headed for the biggest monthly gain since May 2012 against a basket of 10 currencies.

The GDP report “is not good news for gold as the inflation number is not a hot number, and also there is growth,” Edward Dempsey, the chief investment officer at Pension Partners LLC in New York, said in a telephone interview. “It’s clear that inflation is not a cause of concern.”

This quarter, the metal has declined 8.1 percent, while the dollar headed for the biggest gain since September 2008.

Aggregate gold trading was 24 percent above the average in the past 100 days, according to data compiled by Bloomberg.

The metal tumbled 28 percent in 2013, ending a 12-year rally, on expectations that the Fed would scale back stimulus as the economy recovers.
The central bank cut its monthly asset purchases by another $10 billion to $15 billion this month, keeping it on track to announce an end to the program in October. Policy makers also raised their median estimate for the federal funds rate at the end of 2015 to 1.375 percent from 1.125 percent in June.

“A further rise in the value of the dollar and upward adjustment in expectations about the path of Fed interest-rate hikes in 2015 will, in our view, result in investor-position liquidation triggering more price weakness” for gold, Georgette Boele, a precious-metals analyst at ABN Amro Group NV in Amsterdam, said in a report.

Silver futures for December delivery rose 0.6 percent to $17.537 an ounce. Yesterday, the price touched $17.27, the lowest since June 7, 2010.

This year, gold has climbed 1.1 percent, and silver has dropped 9.5 percent.