LONDON, July 1, 2013 /PRNewswire/ --
Gold had been seen as a pretty safe bet for investors during the recent turmoil in the global economy. Yet after a decade long rally, gold experienced its biggest fall in value for 30 years in April and again this week tumbling to its lowest level in nearly three years, sparked by the Federal Reserve setting out a time frame for the US central bank to exit its stimulus programme, as well as the threat of heavily indebted Eurozone countries selling their gold reserves.
(Logo: http://photos.prnewswire.com/prnh/20121115/574147 )
The continued uncertainty has created significant volatility in the price of gold. Saxo Capital Markets UK has found that during the same period in 2012 there has been a 288% increase in the amount of gold trades being placed by its subscribers.
Ole Hansen, Head of Commodity Strategy, observed that: "Volatility in gold options has picked up over the past week. Investors are still nervous about the potential for further losses. This is demonstrated by the fact that put volatility is higher and a majority of the top 10 most-traded strikes are puts."
However, the data shows that most investors are still using gold as a safety net when trading currencies. There has been an eight fold increase in the number of FX gold trades being placed in 2013 compared to 2012, with 99% of those trades against the US Dollar.
In the long run the outlook for gold remains uncertain. Although in theory the decrease in the price of the precious metal shows an improvement in the global economy, it is still heavily affected by the inflationary policies introduced by the Federal Reserve, European Central Bank and Bank of England. The push and pull effect of equity markets against currency trading and general uncertainty over the economic outlook has created a fluid market for gold.
Ole Hansen, Head of Commodity Strategy said:
"We see gold still dropping like a stone on route to the next major technical target of 1150. I think gold will eventually stabilise, but whether we will see a meaningful bounce from here will require a long period of confidence building from central banks, as many investors have been badly hurt."
For more information on gold and trading options please see: http://uk.saxomarkets.com/online-trading/gold-xau-usd
About Saxo Capital Markets
Saxo Capital Markets UK Limited is a wholly owned subsidiary of Saxo Bank A/S, the parent company of the Saxo Bank Group, an international financial services group specialising in trading and investment across global financial markets. Saxo Bank has operated in the UK since March 2006, initially as a branch of Saxo Bank A/S and since 1 January, 2012 as Saxo Capital Markets UK Limited.
Saxo Capital Markets UK offers private investors online trading and investment in FX, CFDs, ETFs, Stocks, Futures and Options. Saxo Capital Markets UK also offers online trading services to a broad institutional client base including Hedge Funds, Introducing Brokers and Money Managers through our award-winning trading platform SaxoTrader, SaxoWebTrader and SaxoMobileTrader and B2B/API services via Saxo Bank A/S our parent company.
Additionally a large base of Banks, Brokers, Asset and Money managers, utilise Saxo Bank´s award winning white label solutions, in order to provide their clients with access to all or some of our trading platforms and associated liquidity.
This material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. This material may refer to past performance and you should note that past performance is not necessarily a reliable indicator of future performance. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by Saxo Capital Markets UK Limited or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
Our products are traded on margin and it is possible to incur losses that exceed your initial deposit.
Saxo Capital Markets UK Limited is authorised and regulated by the Financial Conduct Authority, registration Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA
Media enquiries
Uriel Alvarado Cancino, Chief Public Relations and Marketing Officer, Saxo Capital Markets UK, +44-(0)207-151-2026, ukmedia@saxomarkets.com
Nicholle De Beer, Public Relations and Marketing Manager, Saxo Capital Markets UK, +44-(0)207-151-2024, ukmedia@saxomarkets.com
Smithfield, +44(0)20-7360-4900, ukmedia@saxomarkets.com
Share this article