Friday, December 20, 2013
Gold has lost nearly a third of its value year-to-date, and is currently quoted at US$1,220/oz. With the start of the QE taper from Jan next year, the asset that was once considered a safe-haven may further lose its luster due to a continued strengthening of the greenback as the US economy improves. Two major sell-offs occurred during the year in Apr and Jun, that saw the commodity shed an aggregate 26%, sparked by a 1ppt rise in 10-year US treasury notes to 2.61% on the perceived recovery of the economy. As long term yields rise, more funds may be channeled away from the shiny metal that has little economical use, except for jewellery.