Gold price firms in holiday-thinned trade, spotlight on Fed and Trump policies
The yellow metal has gained 27% so far this year.
Spot gold dropped to $1,085 per ounce, a level not seen since the start of 2010.
Markets were quiet due to Rememberance Day in Canada and Memorial Day in the US. Kitco said after a brief uptick in prices, technical sellers pushed gold lower as the day progressed.
Silver followed gold down to $14.27 ounce, a 1.14% drop. Oil also dropped 3% to $45.86 a barrel. December N.Y. copper closed down 5 points at 221.70 cents today.
Gold fan Mark O’Bryne warns against buying into gold’s dip:
I’d love to tell you that $1,080 is the low – that this is the mother of all buying opportunities, that you should all max out your credit cards and buy every flake you can possibly get your hands on.
But gold-lover though I may be, that is not what I see next.
Until Monday’s stabilisation, we’d had something like 13 down days in a row, which is extreme, even by the standards of this bear market, so some kind of steadying of the ship is likely.
But the bottom line is that this is a bear market. And the trend is down. Fighting the trend is no more effective than fighting the tide or fighting the wind. You’re better off accepting it for what it is, and going with it.
Comments
chris baus
Interest is also a measure of risk. At low interests risk is not as great if one looses as it is at high interest. With the near zero US Fed interest, risk is not great. It explains the volatility as the risky players (heavily leveraged) remain in the game. Rise the interest and it will began to wipe the riskier players reducing volatility.
Gold is a hedge agains unexpected, unforeseen risks but with low interests has its role diminished. Rise interests and it will be coming back into portfoilios.
Current markets are abnormal. A space traveler from another galaxy and knowing basic Earth’s economy seeing the Dow Jones would say the US economy is booming. Looking closer would observe that this is not true, it is struggling. So what happening with gold is the effect of near zero interests, artificial reduction of risks for the stock players therefore distorting the markets and encourage speculations.
Even more worrying are the effects of the Fed actions on the future of the economy and possibly democracy. Recent graph (Bloomberg) of earnings from 2006 to 2015 shows that 90% of Americans earn less now than in 2006, and 50 percentile is over $3,000 worse off now. At the same time 10% of the best earners is earning more than 2006. This is disturbing as it shows that the US is moving from inclusive economy to an extractive one. Even rising employment is ominous if there is no real wage growth. Using comparison to ancient Rome, more slaves (workers) meant richer owners not better living standards for slaves.
Moving from inclusive economy to extractive one is a sign of moving towards collapse of the democracy as the system in the longer run. It also explains lack of inflation (though in luxury goods inflation is high).
In any case, gold is good as long as the Fed stops turning the markets into a random game.