After making a run for the $1300 mark in recent weeks, the gold price has now pulled back to around $1280 in today’s trading session and with the US dollar making a solid comeback over the last week, gold will have to find something special to push significantly higher.
The main actors that drove gold higher over the last month such as the government shutdown and US Federal Reserve who have come out more dovish about the US economy are starting to have less effect.
If the government shutdown ends soon as some predict, the focus will again be ob US economic data and any disappointing news may be the catalyst for gold to resume the uptrend.
"Gold has become a victim of a stronger greenback in the short term. A weaker euro and concerns around growth in Europe have given a leg up to the dollar, pushing gold prices down below key level of $1,280," said Kyle Rodda, market analyst with IG Markets.
"We haven't seen much of data coming out of U.S. recently due to the government shutdown. If we see more weaker data that could cause bond yields to fall and support gold. Also, technically, we need to see gold push above the challenge of $1,300 level." he added
Another factor hindering the gold price is the recent rebound in the stock market as investors snap up equities and what some say are bargain prices after the heavy losses in recent months.
For many stocks are a better bet than gold to the potential yields they produce, something that the precious metal does not.
"Some calm has been restored in the equities market, we are seeing a bit of withdrawal of interest from the gold market," said Macquarie commodity strategist Matthew Turner.
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