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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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A Quick Note on Inflation, Unemployment, and Fed Targeting

There was a time when price stability and well-behaved indicators of inflation would send gold prices lower.  After all, many investors and savers typically buy and hold gold as an inflation hedge.  With little inflation in sight, prospective buyers would not be expected to stock up on the yellow metal . . . and some might even wish to reduce their bullion holdings. Uncharacteristically, today’s (Tuesday's) news that U.S. producer prices were flat in July sent gold prices up more than $12 an ounce in New York trading. ...

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Gold Market Update

Although continued “uncertainty” and “caution” remain the gold market’s watchwords, the odds favor further gold-price recovery in the weeks and months ahead -- despite continuing attempts by large-scale speculators and institutional traders,  driven by computer models and momentum indicators, to knock gold prices lower. For the moment, we believe gold prices are still in a “bottoming phase” and may have more work, technically speaking, around recent levels before breaking through overhead resistance and moving substantially higher.   ...

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GOLD: Institutional Divestment Nearly Over

Gold has been in retreat since hitting an all-time high of US$1,924 an ounce in September 2011. That's an astonishing decline of more than 35 percent -- a whooping correction in the midst of, in my view, a long-term bull market that began roughly a dozen years ago and still has years of life ahead. Over the past year and a half, hedge funds and other institutional investors have been persistent sellers -- mostly of gold ETFs. In doing so, they have provided ample supplies to meet the persistent and continuing demand for physical metal by Asian investors and central banks. ...

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Gold Market Tightens Signaling Possible Price Recovery

Gold hit a fresh three-year low of $1,180 per ounce in late June. By early July the metal's price had struggled back to the $1,240 to $1,260 range.  Although the most recent decline began back in April, the sell-off accelerated in June, just moments after Fed Chairman Ben Bernanke's statement that the U.S. central bank might soon taper off its program of quantitative easing. Yesterday (Wednesday, July 10th) Chairman Bernanke put that notion to rest, at least for now, and gold quickly shot up some $50 an ounce briefly trading over the technically and psychologically important $1,300 level. ...

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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: A Quick Note on Fed Policy

Gold prices moved higher this morning in anticipation of Fed Chairman Bernanke's testimony today before the Joint Economic Committee. Recent speeches by other Fed officials in the past few days suggest the Fed will leave the door open to stepped-up quantitative easing should the economy falters or if inflation remains below target. Any talk of more QE from Bernanke this morning could give gold enough juice to re-test overhead resistance around $1400 . . . and possibly move higher. See my recent posts on NicholsOnGold.com for more on Fed policy and the economy. ...

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Fed Speak: Implications for Gold

This week's gold-price action reflects a market once again range bound, searching for direction in an uncertain economic environment.  For sure, the risks of further gold-price retreat remain high.  Much depends on the market's sense of prospective Federal Reserve policies. This Wednesday the financial markets will be listening carefully to the latest Fed speak on monetary policy and the economy for clues. First off, the FMOC will be releasing the minutes of its April policy-setting meeting -- always an interesting document to Fed watchers who, like the Greek oracles, look for meaning in ...

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