Group Name: Hedge of Glory

Weeks Covered: Oct 13-24

Evaluation Period: Oct 27-31

Overall Forecast Price Direction for Evaluation Period: Down

Treasuries Set for First Loss in Six Weeks Before

Fed, Auctions
Writer: Liz Capo McCormick
Date: 24 October 2014
Source link: http://www.bloomberg.com/news/2014-10-24/treasuries-rise-as-new-york-ebolareport-spurs-demand-for-safety.html
Summary:
The Fed is expected to end its bond-buying program on next weeks meeting as U.S economy is
forecasted to continue moving forward despite a slight slump in GDP growth recorded at 3.1%
in 3Q compared to 4.6% last quarter. U.S. 10-year notes yield 0.69 percentage higher than its
peers and is expected to end between the range of 2.35% to 2.5 % this year. U.S. treasury is
also slated to sell almost $100B worth of 2-7 year notes over the course of next week. Analysts
expect a higher-rate environment due to tighter Fed policy.
Effect on Gold Price over Evaluation Period:
Direction

Down

Explanation

At the end of Feds bond-buying program next week, US economy is

expected to move forward despite economic uncertainty these past few
days. This prediction will lead to increase in yield. Fed is expected to
increase interest rates. Lower US Treasury prices due to a potentially
hawkish Fed and less reliance on such safe haven assets will result in
higher yield or interest rates. In effect, this pushes gold price downwards.
Treasury bond and gold are both considered safety assets.

Group Name: Hedge of Glory

Weeks Covered: Oct 13-24

Evaluation Period: Oct 27-31

Overall Forecast Price Direction for Evaluation Period: Down

Dollar Bulls Slow the Stampede

Some Investors Pull Back After Worries About Global Growth, Possible Fed Delay
in Raising Rates
Writer: James Ramage
Date: 23 October 2014, 3:22 p.m. ET
Source link: http://online.wsj.com/articles/dollar-bulls-slow-the-stampede-1414092140?
KEYWORDS=Dollar
Summary:
People have doubted the US economy this month, which brought a halt to the dollars 12-week
winning streak, according to the ICE Dollar Index. Those doubts intensified last week after
people had worried about the health of the global economy, reconsidering the strength of the
U.S. economys recovery and believing that the Federal Reserve would delay any increase in
U.S. interest rates. In turn, people are more interested in safe haven, and this gives a good
advantage to gold prices.
Effect on Gold Price over Evaluation Period:
Direction

Up

Explanation

The doubts created by several factors (i.e. health of the global economy,
rethink of U.S. recoverys strength, and the prospect that the Federal
Reserve would delay any increase in U.S. interest rates) brought a halt to
the dollars 12-week winning streak, according to the ICE Dollar Index. As
a result of this decrease in dollar prices, in combination with the markets
heightened risk aversion, the demand for gold increases, partly because it
is considered as a safe haven against the uncertainties present in the
market, and partly because it is now cheaper to buy gold since it is
denominated in dollars. Given these, the price of gold is being pushed
upwards.

U.S. Stocks Trade Higher

Writer: Corrie Driebusch
Date: October 24, 2014
Source link: http://online.wsj.com/articles/u-s-stock-futures-trade-lower-1414153540

Group Name: Hedge of Glory

Evaluation Period: Oct 27-31
Weeks Covered: Oct 13-24
Overall Forecast Price Direction for Evaluation Period: Down
Summary:
US stocks boost as Dow, S&P 500 and Nasdaq Composite increased by 2.4%, 3.9% and 5%
respectively for the past week, as investor assurance on the US economy heightens. Also,
strong corporate earnings results from Caterpillar Inc. and 3M Co. increase Dow industrials
driving the stock market rally. Earnings in general backstopped the recent weakness and
affirmed the US economy strength. James Liu, global market strategist, pronounced that the US
strength will win out the uncertainty driving the stocks up. Thus, investors shift away to stocks,
driving down the price of gold.
Effect on Gold Price over Evaluation Period:
Direction

Down

Explanation

The US stock market has regain its position due to strong third
quarter earnings as demonstrated by percentage gain of S&P 500
and Nasdaq. Stocks recovers from recent downdraft of four weeks
decline.The gain in stock market, in return, will push the gold price
down. Gold and stocks tend to move in opposite directions because
gold is regarded as a store of value while stocks are regarded as
return on value.

Overall Position
Forecast over the evaluation period: Down
Based on our analyses above, gold prices are expected to decline in the coming week.
Although the weakening of the dollar pressures the prices to rise, both the gain in the US stock
market and the higher yield or interest rates drive the prices to go down. Positive outlook on the
US economy led to lower US Treasury prices and increased investor assurance which results to
less reliance on safe haven assets like gold. Also, the turnaround in the stock market after its
recent downdraft further push the gold price downwards.