Demand for Gold Dropped after a Two-week Increase

Euro / LP1907.891934.88-1.39% 
Euro / Dollar1.26561.2835-1.39% 
NEER Index**139.60138.620.71%8.17%

Demand for the dollar steadied over the prior week as reflected by the Lebanese pound’s peg against the dollar that remained at $/LP 1,510-1,514 with a mid-price of $/LP 1,512, since the 4th of September, 2014. Foreign assets (excluding gold) at the Central Bank rose by a monthly 0.97% from $38.05B by August to $38.42B by end-September. Meanwhile, the dollarization rate of private sector deposits stood at 65.89% in August compared to 66.13% in December 2013.

In the US, jobless claims for September registered a 14-year-low since May 2000. Moreover, gasoline prices plunged to a 3-year-minimum. This strengthened the US expansion, leading to a rise in the dollar against the euro, after it declined for 2 weeks in a row. Thus, the euro lost 1.39% against the dollar, ending the week at €/$ 1.2656.

Demand for gold dropped after a two-week increase. Traders’ appetite shifted away from the safe haven as economic data reinforced the case of recovery in the US. This triggered a decline in the price of gold from $1,238.70/ounce last Thursday, to $1,231.89/ounce this week.

By Friday October the 24th, 2014, 12:30 pm Beirut time, the dollar-pegged LP appreciated against the euro going from €/LP 1,934.89, the prior week, to €/LP 1,907.89. The Nominal effective exchange Rate (NEER) gained 0.71%, weekly, to 139.60 points, widening its year-to-date gain to 8.17%.

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