By Michelle Smith — Exclusive to Gold Investing News
Gold prices were down nearly 2.5 percent in March, but still ended 2012′s first quarter (Q1) up over 6 percent. The monthly decline versus the quarterly gain highlights the change in sentiment that occurred during the quarter, and suggests that gold may have trouble regaining its momentum in Q2. By the end of January, gold was up ten percent. Sharps Pixley said gold may be set to reach fresh highs this year much earlier than many might have expected. In its two-month run up, gold prices broke $1,790. By leap day, it was evident how largely macroeconomics, especially US monetary policy, had factored into investors' bullish outlook. On February 29, the metal saw a sharp correction and prices rapidly fell over $100. Macroeconomic pressure This price decline was most heavily blamed on US Federal Reserve Chairman Ben Bernanke, who failed to announce further quantitative easing (QE). More QE would have injected liquidity into the US economy and supported inflationary fears, both of which are bullish for gold. Q1 revealed just how prominent a role the Fed plays in the gold market. Investors were very pleased when it was announced that US interest rates would likely remain low until 2014. However, the lack of further QE was a severe disappointment, and investors continue to try to read into Fed statements for an indication of whether or not more QE will be forthcoming. Further, there is a continuing flow of data from the US that supports a positive outlook for the economy. That improvement puts further pressure on gold because it places the metal in competition with the dollar for safe haven cash.