Falling Investment in Gold: For how long the commodity remain in bearish trend.
Thanks to Fed for making yellow metal little bit bitter than its palatable taste that had kept Gold prices above $1400/oz. (May 23 Bernanke said tapering may take place: Bernanke Testifies,19 June in News conference Bernanke provides hints on tapering)
First time when Mr. Bernanke told congress on 23rd May that Fed may begin tapering in next few meetings if policy makers sees indications of sustained economic growth, Gold slumped from the level of $1410 near to $1370. Second time on 19th June in a news conference Mr. Bernanke said that tapering can happen if economy continuously shows better results. On the day Gold fell near to $25. Tapering fear has thus kept this precious metal under high volatility.
If we look at SPDR Gold Trust, world largest exchange traded product, the investment has gradually fall from mom basis since May, 13. Gold volume was highest in April at 7.68mt that gradually fall to 3.33mt till September end. Investors are decreasing their stake as US economy is strengthening.
Next two weeks are very crucial for US economic data but there is less expectation from Fed to take any step towards tapering until the economy stabilizes. But investors have lost faith in haven asset as market is uncertain about Fed move. Thus the fall in investment and value is likely to continue till the dollar gets its right price. We may see gold trading below $1300 on the day of payroll data release and the trend may continue in next week.