Gold Virtually Unchanged after FOMC Minutes Release

Gold Virtually Unchanged after FOMC Minutes Release

Commentary for Thursday, Aug 1, 2013 (www.golddealer.com) – Gold closed down $1.40 at $1311.00 off highs for the day and the dollar closed higher on comments by ECB President Mario Draghi that rates in Europe will stay low for a long time. Judging from the FOMC minutes the Federal Reserve will entertain no changes in its quantitative easing program which keeps US interest rates at historically low levels.

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Still the US economic numbers look better and the Wall Street feel is strong so I suspect they are thinking about diminishing their bond buying program but fear an interest rate backlash and will keep their real thoughts private. Any change in this program will not be good for gold but at the same time this market does not seem like it wants to give up a recent foothold so sentiment is mixed and expect choppy markets.

Silver closed unchanged today at $19.61 and while the rank and file believers continue to buy on a regular basis there is absolutely no buzz to this market.

Platinum moved up $13.00 at $1442.00 and palladium was up $6.00 at $732.00 and still not much action on the physical side which remains a mystery as car manufacturing is back and growing.

This from Reuters: * Gold has biggest monthly gain since January 2012 * Fed says economy recovering, but needs support * GDP growth stronger than expected in 2nd quarter * Coming up: U.S. weekly jobless claims Thursday – By Frank Tang and Clara Denina – NEW YORK/LONDON, July 31 (Reuters) – Gold dropped in volatile trading on Wednesday, tumbling early on stronger-than-expected U.S. GDP data, then paring losses when traders were relieved after the U.S. Federal Reserve ended a policy meeting without any sign that its bond-buying program would end soon. Bullion ended July with a monthly gain of more than 7 percent, its biggest since January 2012. The metal rebounded this monthly after three sharp monthly declines. In a policy statement after its two-day meeting, the Fed said the U.S. economy has been recovering but still needs support. The U.S. central bank said it would keep buying $85 billion in mortgage and Treasury securities, citing challenges such as a recent run-up in mortgage rates and federal budget-tightening. However, analysts noted that since gold pays no dividends or interest, its price could remain under pressure due to its ultra-sensitivity to interest rates. "The signal today the Fed is still on track toward tapering indicates that at some point we will see higher interest rates," said Ed Lashinski, director of global strategy and execution for RBC Capital Markets’ futures group. "That’s bearish for gold and it’s going to limit the market’s ability to move a lot higher from here," said Lashinski. He put the ceiling at the current rally at between $1,330 and $1,350 an ounce. At a June news conference, Chairman Ben Bernanke said the Fed would probably start to curtail its current round of bond buying later this year, with an eye toward bringing it to a close by the middle of 2014. Financial market participants had widely anticipated a reduction of purchases at the Fed’s next meeting on Sept. 17-18. Spot gold was down 0.2 percent at $1,324.11 an ounce by 4:15 p.m. EDT (2015 GMT). It traded as low as $1,305.30, the weakest in more than a week, earlier in the day. Prior to the Fed statement, U.S. gold futures for August delivery settled down $11.60 at $1,312.40 an ounce, with trading volume about 5 percent above its 30-day average, preliminary Reuters data showed.  – LOW INFLATION – Gold investors now digest the Fed’s policy-setting committee’s comment regarding its concern about the low level of inflation. "The committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term," the Fed said. Earlier in the session, gold dropped nearly 1 percent after unexpectedly strong U.S. economic growth in the second quarter stirred fears the Fed will taper its monetary stimulus. The longer-term downtrend for gold will likely remain in place as outflows have continued in gold-backed exchange-traded products, said Robert Haworth, senior investment strategist at U.S. Bank Wealth Management. Reuters data showed the world’s top gold ETFs have lost around a quarter of their bullion holdings from a record high reached in December 2012.

Walk in and phone business remains quiet with typical summer like conditions but I am not sure why the ECB news of continued cheap money did not produce even a blip on the gold radar screen. Is everyone on vacation and I missed the announcement? Wow! Just before we published this missive the phone lines light up like a Christmas Tree…all buyers…really don’t know what to make of this as there is not much news out there but something spooked the public late in the day. Thanks for reading and enjoy your evening. These markets are volatile and involve risk: Please Read Before Investing

Written by California Numismatic Investments (www.golddealer.com).

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