The Waiting Game

Today’s AM fix was USD 1,614.75, EUR 1,311.95, and GBP 1,032.78 per ounce.
Yesterday’s AM fix was USD 1,622.75, EUR 1,323.29 and GBP 1,034.46 per ounce.

Silver is trading at $28.92/oz, €22.78/oz and £17.94/oz. Platinum is trading at $1,414.20/oz, palladium at $587.70/oz and rhodium at $1,100/oz. 

Gold dropped $8.80 or 0.54% in New York yesterday and closed at $1,613.30/oz. Silver edged down as low as $27.89 and ended with a loss of 0.92%. 


Cross Currency Table – (Bloomberg)

Gold was still hovering in a narrow range on Wednesday, as investors await monetary policy decisions from the US Federal Reserve (1815GMT) and the European Central Bank (tomorrow), which will determine the direction of markets.

A Fed decision to launch QE3 would increase the yellow metal’s appeal as an inflation hedge and bolster prices. 

US house prices increased for their 4th month in a row suggesting that the US housing market recovery may be underway which dampened further hopes of any immediate easing in the US Fed’s monetary policy.

The markets are playing a waiting game and investors are cautious.  Thursday’s ECB policy meeting will determine if President Mario Draghi will have the backing he needs to embark on significant policy changes to rescue the region’s financial woes.  

Yesterday, German Finance Minister Schauble said in an email response to a newspaper, “The rules of the European Stability Mechanism don’t foresee a banking license to allow refinancing at the European Central Bank”.  Schauble’s comments fell like a penny in a wishing well that rippled to curb the market’s enthusiasm. Since Draghi’s initial comments to “do anything it takes” gold has increased by nearly $50/oz.


Gold Prices/Rates/Fixes /Volumes – (Bloomberg)

China’s PMI (Purchasing Managers’ Index) dropped to an 8 month low of 50.1 in July from 50.2 in June, showing further contraction.  It shows that the global economic slowdown is not just contained to the shores of the Atlantic.

Since March gold has not been able to hold its 100 day moving average for more than 3 days and closed just under it again yesterday.  

A boost from the US Fed will allow more people to look at gold as an investment alternative. The average Joe public still doesn’t have a position to hedge against other investments.  When QE begins ETF inflows will increase, physical buying will return after monsoons in Asia, the Indian government get’s their power grid in order, and it will be the brave early adopters that could be rewarded.

For breaking news and commentary on financial markets and gold, follow us on Twitter.

NEWS
Gold Gains For First Day In Three On Prospects Of More Stimulus – Bloomberg

Gold steady as investors eye central bank decisions – Reuters

Gold futures rebound in electronic trading – MarketWatch

COMMENTARY
Euro Area forecast by Standard and Poor – True Economics

China PMI Misses And Prints Lowest In 8 Months With 10 Of 11 Sub-Indices Contracting – Zero Hedge

U.S. Stocks Decline After German Comments on Banking License – San Francisco Chronicle

 

 

Stephen Flood

Stephen Flood is the CEO of GoldCore. He is a former Wall Street equity trader and FinTech expert. He has been involved in the precious metals markets since 2004 and has appeared as an expert contributor on CNBC, CNN, BBC, RTE & Bloomberg TV and has had articles published in the Irish Times, Irish Independent and The Sunday Business Post.

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