Fundamentally gold should see a pull-back first before the next move higher

The Gold market is very quiet and range-bound ahead of the Fed FOMC meeting today. While we expect no surprise in Mr Bernanke’s press conference following the decision. The Fed’s Fund rate is to remain unchanged and indications should be that there will be no further quantitative easing after the current bond purchase program has been completed.

Because the Fed is unlikely to embark on further quantitative easing does not change our view on gold. We still believe the metal may find upside support towards year-end. Real interest rates remain exceptionally low and government borrowing high. These tow factors are core to our bullish view on gold. Short term however we would not be surprised to see gold dip lower. We believe fundamentally gold should see a pull-back first before the next move higher. We see value in gold on approach of $1,450.

Gold support is at $1,500 and $1,493. Resistance is at $1,516 and $1,525.


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