Mingze Wu | Oct 08, 2013 07:22AM ET
Gold rallied slightly yesterday during US session when President Obama reiterated that he will not be “held hostage” by the House Republicans, and offer to negotiate AFTER the Debt Ceiling and Government Budget issues have been resolved. This doesn’t sound much, and has been the stance that Obama has been adopting many months ago. Hence it is reasonable that Gold prices only pushed higher mildly, when US stocks basically ignored what Obama said and actually rallied during the meantime – so much for “crisis” fears.
Hourly Chart
Weekly Chart
Long term fundamentals agree as well. As QE is expected to be stopped in 2014, the reasons to hold gold will decrease. The only way this will change would be a unthinkable default by US whose ripples will be long lasting. Hence, prudent traders may wish to consider if speculating on long Gold positions right now is worth the risk right now, or perhaps it may suit their Risk/Reward ratios better if they choose to go long AFTER a US default has been confirmed.
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