Dealing Desk: A bumpy Christmas ride for gold ?

Dec 10, 2015·Geoffroy Buffetrille

We have seen an increased volatility on the main traded markets following last week’s ECB announcement.

While extending the QE for six more months, president Mario Draghi did not expand the size of the program, leaving most of the audience short of expectations.

On the gold market, it is noticeable that, while demand for physical bars remains quite strong, the prices keep being pressured, most likely due to the domination of sellers in the futures market. As a result, last Friday, while gold prices were moving through a downward channel for one month, the upper range was broken, creating a short squeeze propelling the price up to 1086.6 USD/oz before going into the weekend.


Thus, it remains to be seen how the very anticipated rate hike from the FED will affect the US equity and the gold prices. Most are saying this is already priced-in but, with the VIX consistently failing to reclaim his 2 years average since September, we can feel there is an elevated amount of tension among equity market participants. We may, therefore, see more some price action this year end.


• VIX is also called the "fear index", this reflects the magnitude of the volatility extracted from the S&P option market.

As trading a market is a game of situation and probability, there is no certainty when it comes to predict a price movement.

↑ Gold has been retreating slightly in preparation of a tighter monetary policy in the US; our clients have taken advantage of the higher price to sell their position, mainly in Europe. However, our clients have been net buying, especially in Asia.
↓ Silver, which is highly correlated to gold, has followed the same downward trend, but our book was mainly filled by sell orders over the past week.
↓ Platinum & Palladium have dropped the most this week.

Week on week price performances
Gold -0.8%, Silver -1.0%, Platinum -3.2%, Palladium -3.4%

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