Sunday, August 18, 2013

Gold's Short Term Outlook

The long term outlook for gold remains positive. Shorter term, however, increased volatility is likely. Both higher and lower prices are in the cards. It all depends on policy makers, in particular the US Fed. Between August and September there are two FOMC meetings with a press conference: September and December. Suppose the Fed would “taper” their bond purchases they will not announce it in December because it will be right before the new Chairman will take over. September is the most likely month to announce it.

So the September FOMC meeting will be an important one. Basically there are two possible outcomes. Tightening monetary policy is the first one. Doing so in a weak economy will have deflationary consequences. It will lead to higher interest rates and lower precious metals prices. Accommodative monetary policy, by contrast, would be bullish for gold and will lead to higher prices going to the end of the year.

- Source, Gold Silver Worlds: