Skip to comments.Easy Fed Gives Gold Rocket Fuel
Posted on 06/20/2019 6:04:23 AM PDT by Migraine
(Kitco News) - Gold and silver prices are sharply higher in early morning U.S. trading Thursday. Gold powered to a five-year high, while silver prices hit a five-week high. Major central banks that are leaning easy on their monetary policies are boosting the metals and the raw commodity sector, in general. Gold is also seeing increased safe-haven buying interest as tensions in the Persian Gulf are on the rise. August gold futures were last up $37.50 an ounce at 1,386.50. July Comex silver prices were last up $0.417 at $15.385 an ounce.
Traders and investors are still digesting Wednesdays conclusion of the Federal Open Market Committee (FOMC) meeting that saw no change in U.S. interest rates, but the Fed did lean significantly more dovish. The FOMC statement said the committee would lower interest rates in the coming months if U.S. economic growth begins to slow down. The FOMC expects the U.S. economic expansion to continue but uncertainties about this outlook have increased, the statement said. About half of the FOMC members now expect the Fed to make at least one interest rate reduction this year. The FOMC statement also eliminated the word patient from its monetary policy stance.
Markets are continuing to react to the dovish Fed meeting and also to European Central Bank President Mario Draghis easy stance on monetary policy in comments he made earlier this week. The U.S. dollar index has sold off, the Euro currency has rallied, crude oil prices have surged and U.S. stock indexes have pushed higher and within easy striking distance of their record highs. European and Asian stock indexes were also mostly higher overnight.
The Bank of England and Bank of Japan also hold their regular monetary policy meetings yet this week.
Gold is also seeing safe-haven demand today on reports Irans military shot down a U.S. military drone in Iranian territory. Also, a missile struck a Saudi Arabian water plant, and Iran is being blamed. The U.S.-Iran stare-down just got ratcheted up another notch. President Trump is now likely closer than ever to unleashing some degree of a military operation against Iran. Its a good bet this situation will get worse before it gets better.
The key outside markets today see Nymex crude oil prices solidly higher and trading just above $55.00 a barrel. Meantime, the U.S. dollar index is lower on good follow-through selling from solid losses posted Wednesday afternoon in the wake of the dovish FOMC statement.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, leading economic indicators and international transactions (current account).
Technically, the gold bulls have the solid overall near-term technical advantage and gained more power today. Prices are in a seven-week-old uptrend on the daily bar chart. Bulls next upside price objective is to produce a close in August futures above solid resistance at $1,400.00. Bears' next near-term downside price breakout objective is pushing August futures prices below solid technical support at $1,361.50. First resistance is seen at $1,390.00 and then at todays high of $1,397.70. First support is seen at $1,375.00 and then at $1,370.00. Wyckoff's Market Rating: 8.5
July silver futures bulls now have the overall near-term technical advantage. Prices are in a three-week-old uptrend on the daily bar chart. Silver bulls' next upside price breakout objective is closing prices above solid technical resistance at $16.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $14.625. First resistance is seen at the overnight high of $15.40 and then at $15.50. Next support is seen at $15.25 and then at the overnight low of $15.12. Wyckoff's Market Rating: 6.0.
The FOMC statement said the committee would lower interest rates in the coming months if U.S. economic growth begins to slow down.
By then hundreds of billions of dollars of productivity will be lost.
Rates shouldn’t be as high as they are. The yield curve is flat and inverted.
Ignore this analyst.
I hope this is a genuine breakout for metals which have been mired horizontally for 5 years at least.
Why would anybody want higher costs for basic materials?
The private banks have this country just about where they want it.
The interest on the debt will soon outstrip all other in the budget.
i’m thinking this morning might be a good time to buy a couple tubes of liberties or buffaloes
The first part of every 'analyst' is 'anal'...............
‘”Ignore this analyst”. Yassah boss! He obviously doesn’t know jack.
Oh, I dunno... maybe someone who owns mining stocks, or has some physical laying around?
Yes, especially by doing it on ebay. There is often a lag in prices there where you catch the coins at yesterday's pricing.
The U.S. doesn't have an interest rate problem. We have a problem keeping our economy afloat because productivity* is in a steep decline as our population of retirees and unemployable people grows.
* I'm using the term "productivity" as a measure of average output per person, not per worker.
The offshoring of industry over the last 20 years is what is hurting the economy. It’s difficult to “invest”, upgrade and buy new equipment etc. and propel the US economy to new heights when all the factories are off shored somewhere else.
I understand what you mean....but my gold and silver stash coming out of hibernation does not give me a "warm and fuzzy" feeling. Easy Fed and International oil disruption is not what I has hoping for this morning.
The only way out of the debt is inflation, and that means gold has a chance to survive as an asset class.
I think people should have 1% to 2% of their net worth in physical gold.
Lock it up and don’t think about it, but there’s at least a plausible scenario over the next 20 years where the rest of what you own is doing very poorly but gold is suddenly very much desired.
I strongly disagree with you. U.S. interest rates are still near historic lows.
You are using history. I’m using the markets.
Easy money prospects are NOT why gold shot up. Rather, it’s the risk of recession because the federal reserve did NOT push interest rates up. Short-term rates are higher than long-term rates. Anyone who calls an inverted yield curve “easy money” is flipping insane.
Because you’re selfish and only care about your investments, and not the country in general.
Spoken like a true Socialist.
What deep insight...
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