Gold Continues Pullback As Putin Ignores Warnings, Ahead of Fed Meeting

by on March 18, 2014 8:44 am BST

Gold has seen a sharp decline from the recent high of $1,392.6 as market participants weigh the recent events, and subsequent sanctions, in the Ukraine-Russia tensions as “mild.” The Federal Reserve begins their two-day meeting today, as well, which marks chairwomen Janet Yellen’s first meeting at the helm.

The Federal Reserve is expected to continue to taper by $10 billion and bring the asset purchasing program down to $55 billion per month. Lv Jie, an analyst at Cinda Futures Co., said “the attention has now been brought back to the U.S., with investors focused on what the data is showing and what the Fed is going to do.” A lot of what the Fed is going to do has already been taken into account.

Gold lost some of its safe-haven appeal due to the fact that war has yet to break out in Ukraine, but Russian President Vladimir Putin has accepted Crimea’s application to join Russia even though it is not being recognized by the international community. It is likely that overall complacency has taken hold over the situation as Putin moves forward with his plans and, basically, go unchallenged.

US President Barrack Obama said “further provocations will achieve nothing, except to further isolate Russia and diminish its place in the world.” Although, his sanctions, issued by executive order, may not achieve anything either. Sanctions were placed on certain officials rather than the country itself. Putin is going on business as usual a day after such sanctions were issued.

Gold may a key technical move as it made its pullback just under the 50 percent Fibonacci level from the yearly high and low. The precious metal may seek out support at $1,354 per ounce before reaching the 61.8 percent level at $1,344.70. Resistance can be seen at $1,374 prior to retesting the recent high.

1D Chart of GC

1D Chart of GC