Group Name: Hedge of Glory

Evaluation Period: Sept 22 - 26 Weeks Covered: Sept. 8 Sept 19

Forecast Price Direction for Evaluation Period: Down

Overall

Fed renews zero rate pledge, but hints at steeper

rate hike path
Writer: Michael Flahert and Howard Schneider
Date: Wednesday, 17 September, 2014 5:58pm EDT
Source link:http://www.reuters.com/article/2014/09/17/us-usa-fed-idUSKBN0HC09B20140917
Summary:
The Federal Open Market Committee statement released after its two-day meeting last
Wednesday reiterated the Feds intent to conclude its stimulus program some time in October.
The Fed also holds true to its promise of keeping interest rates near-zero for a considerable
time after the program ends. However, projected increase in the interest rates are higher than
previously expected at 1.375% from 1.125% for 2015, 2.875% from 2.50% for 2016 and 3.75%
for 2017. Lastly, the Fed also provided further insights on its exit strategy for the stimulus
program--these included possible reserve rate adjustments and overnight reverse repurchase
agreements.
Effect on Gold Price over Evaluation Period:
Direction

Down

Explanation

The program slated to end in October brings pressure to Gold as

quantitative easing cease--giving further strength to the dollar. Like the
previous weeks, the strengthening of the dollar is expected to have
negative effect on the prices of gold. In addition to this, the higher
projections for interest rates are being factored in the pricing of assets
that yield interest, effectively increasing US Treasury yield (10-year
among others) and also cutting down demand for non-interest bearing
assets like gold.

Oil Prices Slip on Unexpected Supply Rise

Writer:Nicole Friedman and Alexandra Wexler

Group Name: Hedge of Glory

Evaluation Period: Sept 22 - 26 Weeks Covered: Sept. 8 Sept 19
Overall
Forecast Price Direction for Evaluation Period: Down
Date: September 17, 2014
Source link: http://online.wsj.com/articles/oil-prices-rise-as-tensions-reappear-1410950457
Summary:
U.S. oil prices ended lower Wednesday after weekly government data showed domestic oil
supplies unexpectedly rose. Prices fell as low as $93.93 a barrel after the Federal Reserve
concluded its two-day policy meeting and after making it clear that the U.S. central bank wasn't
making any sudden moves toward higher interest rates or other policy shifts that would boost
the dollar. It was reported that crude-oil stockpiles increased by 3.7 million barrels to 362.3
million barrels in the week ended Sept 12, offsetting a decline in oil stored in Cushing, Okla.,
where the benchmark Nymex contract is priced.

Effect on Gold Price over Evaluation Period:

Direction

Down

Explanation

The effect of the increase in oil supplies is the downward pressure on oil
prices. Additionally, the weakening of foreign currencies causes oil to be
relatively more expensive (because it is being traded in dollars) to other
currencies, effectively decreasing demand, and thereby the reducing the
said commoditys price. Historically, we see a positive correlation between
oil and gold--that is, as oil price decreases, gold price also decreases.

Dollar Poised for Longest Rally Since 1967 on

Divergence
Writer: Andrea Wong
Date: Sept. 19, 2014
Source link: http://www.bloomberg.com/news/2014-09-19/dollar-set-for-six-week-gain-versusyen-on-fed-bets-pound-rises.html
Summary:
The dollar has been improving for 10 straight weeks, which was different for other nations
currencies. Yen reached the six-year low as the Bank of Japan continue its quantitative easing.
Euro also reached the weakest in 14 months as the European Central Bank expands its balance

Group Name: Hedge of Glory

Evaluation Period: Sept 22 - 26 Weeks Covered: Sept. 8 Sept 19
Overall
Forecast Price Direction for Evaluation Period: Down
sheet. The dollar climbed as much as 0.7 percent to 109.46 yen, gained 1.5 percent this week,
and appreciated 0.7 percent to $1.2835 per euro, 1 percent stronger on the week. It reached
$1.2831, the highest since July 2013. The euro declined 0.4 percent to 139.86 yen.
Effect on Gold Price over Evaluation Period:
Direction

Down

Explanation

The US Federal reserve and the other countries central banks are at
opposites as the Fed gears up to tighten monetary policy while the
European and Japanese central banks continue to loosen theirs. The
weakening of the other currencies due to economic outlook and loose
monetary policies, coupled with the Feds shutdown of its QE
program, adds further value to the dollar. This makes gold traded in
this currency more expensive to other countries, effectively
decreasing the demand for the said commodity. As a result of the
depreciation of other nations currencies, the price of gold go es
down.

Overall Position
Forecast over the evaluation period: Down
Given our analyses above, we believe that gold prices will continue to fall over the next couple
of days. As the Fed intends to end quantitative easing and has expressed higher projections for
interest rates in the near future, U.S. Treasury yields have risen, and the equity market has also
strengthened. On the other hand, weakening currencies (e.g. yen and euro) and the slight
slump in oil prices further add strength to the dollar, making gold more expensive in the
currencies of other nations, which in turn can hurt the demand for gold and effectively drive its
price
down.