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Gold on Track for Second Weekly Rise
Gold is on track for its second weekly rise aided by a softer dollar, the Greek debt debacle and the U.S. Federal Reserve chairperson, Janet Yellen’s, dovish comments from this week’s monetary policy statement.
The Fed said yesterday that a rate hike would come only after further improvement in the U.S. labor markets and more confidence that inflation would rise. The Fed is estimating lower rates now in 2016-2017, than those which had been forecasted in March. In addition, most policy makers are in favor of hiking rates only once this year or waiting until next year.
Shanghai Gold Exchange premiums were at $2 an ounce to the global benchmark, from a premium of about $1-$2 yesterday. In China, surging stock markets appear to have drawn investors away from the yellow metal in recent months but the recent sharp falls in the Chinese stock market may lead to renewed Chinese demand.
In India, gold bars are now trading at discounts, which shows a dip in demand, attributed to the beginning of the rainy monsoon season.
The European Cental Bank (ECB) has called an emergency meeting today and the European Union (EU) has one scheduled on Monday. Trying to get an agreement for Greece to meet its debt repayments due at the end of the month is the agenda. The debtors and creditors are deeply divided.
Gold has seen safe haven haven demand increase as a Grexit probability rises although many are surprised that the gains have been quite muted. This may be a case of muted so far and gold will likely outperform other assets in the coming days if the situation further deteriorates which seems likely.
In late morning European trading gold is up 0.02 percent at $1,200.57 an ounce. Silver is down 0.25 percent at $16.14 an ounce, while platinum is up 0.15 percent at $1,084.76 an ounce.
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The HUI/$Gold ratio has been hammered for the past few weeks, and is showing zero strength during this uptick in the price of Gold. Look for Gold to swan-dive in the coming days, as the miners are screaminmg 'no mas'!
Monkey Hammer Monday!!!!
Wake me up when it's 10K and I'll look for my inflatable raft and a pump.