For a number of months I’ve been telling you that the next catalyst for gold was the combination of a rising US Dollar and rising US interest rates. It’s a fate de complete concerning the rising Dollar against most world currencies. As for US interest rates, very quietly if you’re not watching the markets as I do, they’re slowing beginning to rise. Today there was talk about a report published by the San Francisco Federal Reserve saying that rates will rise sooner than expected due to improved US economic data. A clue if that’s correct will come when the Federal Reserve meets at the next FOMC meeting and changes the wording concerning interest rates staying low for a long period of time.
As you already know the Ukrainian situation and threats of increased sanctions by the US and Europe has done nothing to support gold prices. If anything, gold has plunged to new break lows from this year’s high and looks like last year’s low near $1180 might be challenged.
The next event that might impact gold is the vote in Scotland for independence from the United Kingdom. The vote’s outcome is too close to call according to the latest Scottish polls. All of England’s bigwigs began touring Scotland yesterday trying to convince the Scots to stay within the UK, with the exception of Queen Elizabeth. If the outcome of the vote is yes, to breakaway, that will act as a catalyst for Catalonia to call for a vote for independence from Spain.
What this might do is cause gold to rally as a yes vote not only would not be good for England but it would have ramification in Spain, a Eurozone member. The Eurocurrency is probably headed into the mid 120′s as it is. A yes vote for Scottish independence might be the trigger for the low 120′s in the Euro, which would propel the Dollar even higher.
This post was published at GoldSeek on 11 September 2014.
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