Be Careful With Gold This Month

Gold’s 30-day historical volatility has dropped to its lowest point since the start of November, according to Bloomberg‘s data. It seems that investors could not be bothered to buy gold over the last month.

Even Mario Draghi’s plan to buy back debt, which pushed the euro down to its lowest level in 11 years, was not enough of a reason to get gold moving. Where most financial markets clearly responded to Draghi’s talk on QE on Thursday, gold futures barely moved.

Ultimately gold barely moved year-to-date, although the precious metal was up by 10 percent mid-January. In 2014 gold dropped 1.5 percent in value and the precious metal was the least volatile of the 22 different commodities that are tracked by the Bloomberg Commodity Index. David Meger, director metal trading at HighRidge Futures, says that the rate hike from the Fed is now the most important event.

Careful With Gold

During gold’s 12-year bull run that lasted until 2012,  stimulus packages from the government pushed investors to search for a hedge against inflation. In the past two years consumer prices have not moved much, so the value of the precious metal fell.

Investors have another reason to avoid gold this month it seems. In March, the gold price goes down in 65 percent of the cases based on Bloomberg data of the last 4 decades. This makes March the number month in which the precious metal loses ground. Chinese consumers buy heavily around the start of their year in January or February; after this celebration there is a natural slump in demand.