Commodity Weekly | week of December 22nd 2014 :: IndiaNivesh

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Bullion came off earlier lows and moved into positive territory on Friday after investors felt the
commodity had fallen too far amid a dollar rally. Gold prices have tumbled in recent months as
markets prep for the Fed to raise interest rates, which is widely seen taking place in 2015, as higher
borrowing costs chip away at the precious metal's appeal as a hedge to weaker paper currencies, the
product of loose monetary policy. The dollar continued to see support after the U.S. Department of
Labor said on Thursday that the number of individuals filing for initial jobless benefits in the week
ending Dec. 12 fell by 6,000 to 289,000 from the previous week’s revised total of 295,000. Economist
had forecast an increase of 1,000. The data came a day after the Fed said it would be "patient" before
raising rates, guidance which it said is consistent with earlier assurances statement that rates would
stay low "for a considerable time." Fed Chair Janet Yellen said the central bank was unlikely to raise
rates for the "next couple of meetings" indicating that a move in April at the earliest is possible. Still,
the dollar firmed on the notion that the days of rock-bottom interest rates are coming to an end,
which chipped away at gold prices until bottom fishers sent the commodity back into positive
territory. Gold prices have tumbled in recent months as markets prep for the Fed to raise interest
rates, which is widely seen taking place in 2015, as higher borrowing costs chip away at the precious
metal's appeal as a hedge to weaker paper currencies, the product of loose monetary policy. Fed
Chair Janet Yellen said the central bank was unlikely to raise rates for the "next couple of meetings"
indicating that a move in April at the earliest is possible. Still, the dollar has generally firmed on the
notion that the days of rock-bottom interest rates are coming to an end, which chipped away at gold
prices until bottom fishers sent the commodity back into positive territory.

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