Mainstream skepticism over Fed economic efficacy could add a missing element to help gold reconnect with risk appetite correlations.
A breakdown in the US dollar index could be a more likely catalyst for an immediate move higher in gold.
Also noteworthy ...
Should skepticism over the Fed's economic efficacy spook investors, it could create a risk off environment that hurts risk appetite and helps the US dollar. In that case, the likely direction for gold is down. But should investors flee other currencies in a risk-off move, namely the euro on renewed Eurozone crisis concerns, that money could seek out gold as an alternative safe-haven to the US dollar, thereby supporting gold prices.
Commodities Essential. 31 January 2013
No new recommendations or adjustments at this time.