Contrasting Fed statements - gold positive - Phillips
Julian Phillips points to slowing economic recovery and the weight of this falling on interest rates. Good for gold.
Posted: Friday , 02 May 2014
Johannesburg (Gold Forecaster) -
Gold Today – The gold price closed at $1,284.90 down $5.50 on yesterday, in New York. In Asia it was being pulled back to $1,283 again and holding in London. The dollar recovered to $1.3858, 0.2 of a cent. The gold price was Fixed in London at $1,285.00 and in the euro at €927.262 while the euro was at $1.3858. Ahead of the opening of New York, gold stood at $1,287.00 and in the euro at €928.64.
Silver Today – The silver price closed at $19.06 down 13 cents on yesterday, in New York. Ahead of New York’s opening, it was trading higher at $19.16
Gold (very short-term): We expect the gold price to consolidate with a positive bias, today in New York.
Silver (very short-term): We expect the silver price to consolidate with a positive bias, today in New York.
While May 1st was a holiday in China, we don’t expect to see Chinese gold demand impact the gold price until next week. However, the London gold market was not happy with falling prices and lifted them ahead of New York’s opening.
There were sales of 2.397 tonnes from the SPDR gold ETF and 0.36 tonnes from the Gold Trust. Their respective holdings still stand at 785.548 tonnes and 164.05 tonnes. Again, this was the main factor behind the fall in the gold price yesterday in New York. The gold price is now sitting on strong support.
China is open again today, but we don’t expect its presence to be felt until next week as the long weekend is underway.
As markets digest the Fed’s statement this week it is becoming clear that they are not so positive on the recovery as they were. No longer are they saying growth must accelerate from the 2% to 2.5% a pace it has averaged since the recovery first started. Instead, they are stressing the importance of preventing the expansion from faltering. Janet Yellen said two weeks ago that the central bank is concerned with what “may be pushing the recovery off track.” Contrast that with her comments on March 4, 2013, of the importance of seeing “a convincing pickup in growth.” This certainly adds a new dimension to ‘a considerable time before interest rates are to rise’. Extend that to the rest of the world and the E.U.’s fragile recovery is called into question bringing Q.E. there, closer to reality, no matter what the E.C.B. says. This is all gold positive.
Silver – The silver price is waiting for direction from the gold price now.
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