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Gold: On the Verge . . . or Nearing a Cliff

Gold has had difficulty sustaining recent rallies and remains trapped in a $50 trading range.  At the lower end, incremental physical demand has so far kept the price above its recent floor around $1175 an ounce . . . but selling by funds and other institutional traders of gold ETFs and “paper” proxies has limited attempts to rally. Whatever improvement in sentiment and upward momentum that may have resulted from this year’s encouraging first-quarter start has now dissipated.  The longer gold lingers in its current range the more difficult it will be for the yellow metal to break out on the ...

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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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The Russian Bear – Bullish for Gold

So far, the gold market has largely ignored the East-West clash over Ukraine and control of Crimea. With gold recently trading mostly within the $1,340–to-$1,350 range, we’d guess the Ukraine/Crimea crisis has added no more than $10 or $15 an ounce to the yellow metal’s price.  But there is the potential for larger, more dramatic price movement in the weeks ahead. For the next few days, world financial markets will be anticipating the March 16th referendum in which Crimea will likely vote to secede from Ukraine and join the Russian Federation.  While this may already be reflected in the ...

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Gold, ETFs, the Fed, and Equity Valuations

Over the past year or two, as the broad equity indexes moved from one high to the next, institutional money – seeking higher quarterly returns – has been moving out of gold and into stocks. This institutional flight from gold by Western investors may have been the single-most important factor weighing on gold prices in the past couple of years – and it owes much to the introduction and popular acceptance of gold exchange-traded funds over the past decade. ...

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The Fed Tapers and Gold Topples

Surprised?  So am I, both by the Fed’s decision, announced this past Wednesday, to taper back its easy-money policies of the past year . . . and, even more so, by the subsequent fall in gold and silver prices. In fact, Federal Reserve Board Chairman Ben Bernanke surprised many investors, traders, and analysts, announcing the Fed would cut back its monthly asset purchases by a relatively modest $10 billion in January – and continue “in further measured steps” if the economic recovery stays on track. To understand my own expectations ahead of the Fed announcement, read my last commentary ...

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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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Time for Contrary Thinking . . . and an Asset Allocation Adjustment

Sentiment in the gold market - especially among the hedge funds and institutional speculators - is already EXTREMELY NEGATIVE.   Market psychology can't get much worse.  Even the gold bugs are dumbfounded.  But, contrarians say this unbalanced situation could be signaling an approaching upturn in prices. The downward pressure on prices emanates from two distinct sources of selling:  First, trading by the gold dealing firms and institutional speculators in the regulated futures markets and the unregulated over-the-counter markets often guided by complex computer algorithms.  These are the ...

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GOLD — What’s Going On?

Gold prices have caved today under pressure from dollar appreciation and wave of technical selling at key chart points - selling aggravated by continued flow of funds from gold (and commodity indexes) to equities. Just as the rising price trend in the equity indexes has attracting more buying, the renewed downward momentum in gold is engendering short sales and more outflows from gold ETFs. Importantly, program trading and other technical strategies have added to the downward pressure on gold - and continue to do so.  (See my previous commentary posted earlier today for more on program ...

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FUELING GOLD’S FUTURE ASCENT

Gold has certainly taken a beating in recent days, giving up all of the gains attained during the Cyprus crisis -- and down nearly 20 percent from its all-time high back in September 2011. And, now having suffered two consecutive quarterly declines for the first time since early 2001, some analysts and investors are abandoning the yellow metal, proclaiming that gold's decade-long bull market has run its course. I'm no "gold bug" – but I couldn't disagree more . . . based on solid reasoning and objective analysis. Short-Term Shock Therapy What the gold market needs to move higher is a ...

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