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What’s Driving Gold — It Ain’t Interest Rates

Although gold prices have had some difficulty sustaining recent gains above the $1365 per ounce level, the metal has nevertheless registered just about the best performance across virtually all investment classes over the past six or seven months. Over the past half year, the metal has rallied some 25 to 30 percent – far better than the major stock-market averages that have received more favorable attention from the financial press for reaching new all-time highs. The reason I mention this is that gold has been trading inversely to equities – and, consequently, the yellow metal stands to ...

Gold: More About the Outlook

You wouldn’t know it reading the Wall Street Journal, Bloomberg’s, or the other popular investment news sources . . . but thus far this year gold prices are up some 15-to-20 percent, making the yellow metal just about the top-performing investment asset class of 2016. We expect gold will continue to be one of the best – if not the best – investment-asset class in the months and years ahead. In fact, by this time next year, gold prices could challenge or even surpass their all-time high of $1,924 an ounce reached briefly in September 2011. And, as outlandish as it may seem, gold could ...

Back from Vacation: The More Things Change . . .

I’m just back from a two-week vacation from the gold market.  In the interim much has changed – especially the metal’s price, which has fallen some $65 to $75 an ounce.  That’s more than five percent – but no reason to despair! While the price has weakened, the metal’s fundamentals, fundamentals we have discussed in past reports, have continued to improve, so much so that some bounce-back now seems likely – with bigger gains due later this year. ...

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Gold-Price Weakness: More March Madness?

Frankly, I’ve been surprised by the recent decline in the price of gold.  I expected a stronger finish to the first quarter with gold prices somewhat higher – possibly even breaking out above the $1,400 an ounce level by the end of March. Instead, gold prices have softened considerably over the past couple of weeks – off nearly $100 an ounce from its mid-March highs and down three percent in just the past week.  On a more positive note, gold is still up 7.5 percent for the year to date. With gold now hovering around the 200-day moving average and short-term momentum now moving into ...

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Gold This Week — Eyes on U.S. Monetary Policy

Precious metals and the broader financial markets continue to react to the latest economic news, both statistical and political, with traders and investors guessing how each new bit of information on the economy may affect the Fed’s decision – when and by how much – to cut back, or taper, its $85 billion per month bond-buying program. It has become the accepted wisdom of the markets that rosy economic prospects increase the odds that the central bank will choose to begin tapering sooner rather than later . . . and expectations of reduced monetary stimulus have been one of the key bearish ...

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Tapered Expectations

Long constrained between $1,180 and $1,300 an ounce, gold has finally broken out on the upside, only to find itself trading within a new, albeit higher, range. Gold now enjoys a "floor" of solid support at $1,300 with initial support kicking in around $1,340. On the upside, initial resistance kicks in around $1,385 and continues up to the psychologically important $1,400 level - but, as outlined below, this "ceiling" could prove vulnerable in the weeks ahead. ...

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Suffering Gold

Gold continues to suffer under a cloud of bearish expectations.  Its price has been trending lower for some 20 months now - and, at recent lows, it is off some 30 percent from the September 2011 all-time high of $1924. A growing number of investors, analysts, and journalists are already writing obituaries for the decade-long bull market and foresee only a grim future for the yellow metal.  These naysayers, most prominently economist Nouriel Roubini who gained some renown for predicting the financial-market debacle of 2008, point to a number factors to support their bearish ...

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Captive Gold: A Quick Note on the Current Market

For now, gold remains captive to the flow of U.S. and global economic indicators and prospects . . . especially those that may influence Federal Reserve monetary policy. With the U.S. economy far from a satisfactory and self-sustaining recovery, the news is likely to become increasingly positive for gold -- with diminishing expectations of imminent "tapering" (that is scaling back the Fed's monthly bond-buying program) eventually replaced with talk of additional monetary stimulus of one sort or another. Home in the Range At the moment, however, gold appears range-bound between $1370 and ...

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Monetary Policies Favorable for Gold-Price Recovery

Global financial markets will be taking their cues from U.S. Federal Reserve and European central bank policy meetings to be held by the Fed on Tuesday and Wednesday and by the European Central Bank (the ECB) on Thursday. The consensus among economists who pay attention to these things suggests there won't be any significant change in Fed policy . . . but, in contrast, there is a strong belief that the ECB will cut European interest rates from their already record low levels. ECB Expectations The ECB has seen a disappointing string of European economic data over the past several weeks. ...

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That Was the Week That Was: U.S. Economic Policy and the Future Price of Gold

Over the past year, short-term changes in the price of gold, both up and down, have largely mirrored shifting expectations of U.S. Federal Reserve monetary policy and the reaction of short-term institutional speculators operating in futures, ETF, and other "paper" derivative markets.  The past week - with gold first falling sharply then recovering smartly, and then dropping again - has been no exception. To little surprise, gold registered its biggest one-day gain of the year on Tuesday as Federal Reserve Board Chairman Ben Bernanke, in his semi-annual report to Congress, eased market fears ...

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