Today the Swiss National Bank made good on persistent market rumours
that it was planning to peg the SFr to the Euro in order to halt the
dramatic appreciation of the currency which has been hurting the Swiss
economy.
The announcement of a minimum EURCHF level at 1.200 nevertheless took
the market by surprise coming after a couple of days where the SFr has
been strengthening again towards 1.10 Euro.
With one more “safe haven” now literally removed investors will look
to gold as the last man standing which also means that a kneejerk
reaction down to 1,862 following the announcement quickly attracted
buyers who took it back up to 1,915.
Whether this will accelerate the appreciation of Gold, which
currently is heading for its best year since 1979, remains to be seen.
Investor interest has been falling over the last month despite new highs
being reached with total gold holdings in long futures bets and
exchange traded funds having dropped by 251 metric tonnes to 2,865
tonnes.
Worries about further margin increases on gold futures, which could force hedge funds to reduce exposure even further, combined with sellers who need to off-set losses on other investments could play its part although the fundamental reasons behind the month-long rally remain.
Gold has the potential to reach 1,970 over the coming months but
after the recent 200+ correction short-term traders will be more
inclined to book profits faster than before. This might slow down
the ongoing rally but it won't stop it.
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