U.S. Fed Policy a Sword Hanging Over Gold: Shover

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Dec. 3 (Bloomberg) -- Bloomberg's Scarlet Fu and Larry Shover, chief investment officer at SFG Alternatives, put futures in focus with a look at the impact of concern over Federal Reserve tapering on the price of gold in "On The Markets." They speak on Bloomberg Television's "In The Loop."

Priced in aggressively.

We cannot deny that the perception of the normalization of u.s. monetary policy continues or remains a sword over gold's head.

There is more to the story.

The market has been in a risk off vibe.

Lower energy prices, higher equity prices have soothed the market and put barriers in control.

Higher treasury yields mean we think our economic numbers are going to be good enough for the dollar to dominate the gold price.

This is an old story, but there is a lack of buying interest from central banks, retail buying, and indian government policy making it harder for indians to buy gold.

That is weighing on gold price.

You have a macro environment with a lot of uncertainty.

We don't know when tapering will occur, why isn't that uncertainty benefiting gold?

So many people believe europe will not have any speed bumps.

The fact that the fed will be able to exit tapering without difficulties.

Overwhelmingly, the market is not pricing in any inflation whatsoever, keeping a lid on the gold price long-term.

Tell us about the rebalancing in gold.

It is really murky to look at.

On one hand, we are seeing buying interest out of china.

Those numbers are a little murky due to what we call round- tripping.

There is an arbitrage process for interest rates and foreign currencies, people use gold.

China does not measure gold going back into hong kong, the numbers are really evasive.

A lot of uncertainty on how much is being bought and how much is being rebalanced.

Those numbers do not tell the full story.

What is needed for gold to make a move higher?

We need inflation.

Any inflation.

We need a major speed bump in the eurozone.

Something that we are not seeing right now.

Or any difficulty in the u.s. with fed tapering.

It does not seem that we are pricing that in enough.

Those things will need to happen.

In the meantime, investment remains on the sideline for gold , holding near a four-month low.

Thank you for today's futures and focus.

"on the markets" again in 30 minutes.

"market makers" is up next as the s&p 500 declined for a third day.

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This text has been automatically generated. It may not be 100% accurate.

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