Amidst volatility observed in the gold market throughout the month, gold has finally found the best week in the month in terms of the price reversal from its floors. The optimism in the gold prices wouldn’t have been possible if the Federal Reserve executives’ hadn’t came up with the notion of continuation of the ongoing monetary stimulus. In line with the bullish fundamentals concerning the Fed’s statement, the market, in total, has risen by up to 2.6 per during the week.

Despite the market had already lost faith in the safe haven and the overall market had slowly started to shift to the other vehicles of investment, to name some, stocks, bonds et cetera, with Fed’s concern over the US economy and its belief that tapering the ongoing monetary stimulus could dampen the economic recovery, ultimately has given some hopes to the precious metals market. Considering the fact that the US economy has been recovering from its recessionary state, the lower than expected economic growth rate has been prime concern for Fed before going for curbing the ongoing monetary push.

With the global holdings of the gold based contracts, both paper and physical, seeing a downturn, the current optimistic fundamentals for the gold could be expected to last only for few days ahead. The market, despite of tremendous volatility and potential risks, could opt for gold, but keeping in mind that the bearish pressures from the central bank of the largest economy of the world, the US, could at any time be unleashed in the market.

Considering the fact that the gold market has been lately witnessing serious rounds of hustle and bustle, the core gravity for gold market would be the economic recovery of the US, unemployment rate and more importantly, Fed’s policy reform regarding the unprecedented quantitative easing package.

Time will only determine the magnitude and direction of the gold market at international arena and for now the traders may tread on the short term depth of the market.

Note: This blog is just an expression of the author’s opinion and cannot be deemed responsible for any losses incurred.