By Richard Rittorno
The spot price of gold continues to flirt with the $1,400 level, trading briefly above $1,400 before retreating back below. Gold trading appears to be muted as investors continue to look to the Federal Reserve for any sign/hint to the Fed's thoughts on the starting point of tapering.
Looking over gold's chart for 2013, we find gold for the most part has tracked fairly well on expectations of the Fed's stimulus program beginning to unwind this year. On Friday, gold bulls pushed the metal higher by about 2% on the headlines of a disappointing new-home sales report. New-home sales dropped by 13.4% -- the worst level in more than three years. This shifted sentiment once again back into the gold bugs' camp, as speculation the strength of the housing recovery is stalling and there is uncertainty around the Fed's starting point to unwind its $85 billion stimulus.
Add into mix the Fed meeting minutes from July showing that policymakers remain split on the timing to begin the unwinding, and they cited the economic data that continues to be mixed. Bottom line: With gold tracking the Federal Reserve's action so closely in the past, gold futures could provide investors hints as to the Fed's action -- albeit the time horizon is short.