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Black October coming for gold?

Talking Numbers

What’s next for gold as we enter the last quarter of the year?

Just when gold shows signs of glimmering once more, it takes another hit.

The third quarter of 2013 was the best quarter for gold in a year. From the start of July until the end September, gold was 8.6%.

Then came yesterday, which saw bullion drop nearly 3%.

Oddly enough, what caused the selloff in gold was none other than the government shutdown itself. Gold is often thought of as a safe haven in times of economic and political uncertainty.

(Read: Gold ends under $1,300; shutdown fails to trigger rally)

For several weeks, gold rallied on the prospects of US military intervention in the Syrian civil war. As that subsided earlier in September, the markets then turned its attention to the Federal Reserve Bank.

Over the past few years, the Fed has been buying US Treasury and mortgage bonds, most recently to the tune of $85 billion per month. This was meant to add stimulus dollars into the financial system. However, it was widely anticipated the Fed would begin tapering this program by the end of September. It turns out, they didn’t. As gold is often used as a hard asset hedge against inflation, and with dollars continuing to flow into the economy at the same pace it did previously, there was the possibility that gold would have a comeback and help permanently erase the 25% it lost in the first half of the year.

Once the US federal government shutdown yesterday as congressional Republicans locked horns with the Democrat president over the budget and the future of “Obamacare”, the markets did the surprising thing – it sold gold. Some investors reasoned that all the risk had already been priced into the metal and the motivation was no longer there to continue holding as much of it.

(Read: Gold tumbles as investors watch Washington dysfunction)

So, what’s next for gold as we enter the last quarter of the year?

Looking at gold’s fundamentals is CNBC contributor Zachary Karabell, founder and president of RiverTwice Research. On gold’s charts is Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grayson.

What’s next for gold? Watch the video to see what the fundamentals and technicals have to say about it.

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