Precious Metals Higher in Rangebound Action
Apr 29th, 2008 | By Doug Casey | Category: Gold MarketCautious trading seen ahead of Fed. Gold stayed almost entirely within a tight $5 range from the far East straight through the New York session on Monday, finishing at $893.20, up $8.20 from Friday. Overnight, gold has fallen off.
Platinum also traded narrowly, within a $15 range and with a bias to the upside, ending at $1975/oz., up $18. Overnight, platinum is off sharply.
Silver spiked in New York morning trading, peaking at $17.14, but was unable to hold above the $17 level, sliding back to close at $16.99, up 15 cents. Overnight, silver has been trending lower.
(Click here for charts)
Lack of volatility was the order of the day on Monday in the precious metals markets, which probably came as a relief to traders jolted by recent sharp price swings. And most analysts expect trading to remain thin ahead of the Fed’s interest rate decision, due out on Wednesday.
Gold yesterday received support from the energy sector, which saw oil prices rising, but not much from the dollar, which was little changed.
Silver took its cue in part from copper, which was firm on supply worries.
If “Gold is holding up on oil and because of the threat of inflation,” according to Miguel Perez-Santalla, of Heraeus Precious Metals Management in New York, then what’s the likely outcome this week?
The Fed’s decision could have significant ramifications for gold. A rate cut of another 25 basis points, once thought all but certain, has picked up a bit of doubt in the face of increasing inflation.
Should the Fed go ahead with that quarter-point cut, that of course is negative the dollar and positive gold and, if the cut isn’t already factored into the current price, then “look for the bull trend to reassert itself,” says Ralph Preston, of HeritageWestFutures.com in San Diego, California.
However, “We expect the dollar’s rally to pick up steam if the Federal Reserve decides to stand pat on interest rates,” said Edward Meir of MF Global. “This could set off another potentially heavy round of profit-taking in commodities.”
So the easy call is that, “Gold will trade cautiously in the next couple of sessions” ahead of the Fed, said analysts at Action Economics.
Doug Casey is a contrarian investor, sought-after public speaker and author of several books. His work "Crisis Investing" held the position of # 1 bestseller on the New York Times list for 26 consecutive weeks. Doug's unusual views on the economy - and just about everything else - have gained a huge following in the investment community, and it certainly helps that his stock recommendations of undervalued junior exploration companies have made his subscribers millions. Now in its 27th year, Doug's monthly newsletter, the International Speculator, is one of the most established and esteemed publications on gold, silver and other natural resource investments. Together with the Casey Energy Speculator, it covers a broad range of carefully selected stocks with the very real potential of double- and triple-digit returns within 12 to 24 months.