Gold waiting on Fed action

Silver maintained the pre-Fed premium as well, and was last seen trading near $20.80 an ounce (a gain of about three cents) while the noble metals complex offered a mixed showing in early going. Platinum continued to rise, adding $4 to climb to the $1,617.00 level, while palladium witnessed some profit-skimming action as it sank $7 to the $534.00 bid level.

Rhodium added $50 in previous trading action and was thus quoted at $2,130.00 per troy ounce. All of the above took place against a marginally lower US dollar at just after the nine o’clock hour in New York (81.39 on the index, down 0.03). Crude oil hovered near $73.50 (down 15 cents) and was unable to climb out of its recent funk.

Metals traders remained convinced that the Fed will say that which they already believe it might say, however progress through the $1,285-87 area remained a tad problematic at this juncture. Some are also keeping a watchful eye on the period ahead of options expiry due on the 26th. As well, gold’s progress to the round number is being eyed within the context of how much help the euro can still provide to it.

The common currency stalled out this morning as regional debt jitters put pressure on it and had it trading at near 1.303 against the greenback. There is, however, something out there which has already hit the 1,300 figure; that is the bullion holding tonnage found in the GLD. Meanwhile, the GLD’s parent opines that the five-fold augmentation in gold prices since the beginning of this decade is not only not a bubble, but that it will not turn into one or burst, (ever) even if it does so.

All of this, presumably, because, now, people are buying gold because it is rising (!), but also because it is nowhere near its inflation-adjusted value (some $1K above here…). No one however recalls seeing a market or economics course formula by which it is stipulated that every asset must eventually rise to such a level. Plenty, however, do recall what happened after some folks bought the metal (under similar “nuttin’ but blue skies” conditions) at its record of $845 in 1980; they are still searching/waiting for the day they might break even on.

It’s as if last week’s George Soros-originated caution about everything being temporary (as opposed to eternal) and not much at all (including gold) being utterly safe (a truism, if ever there was one) prompted an insta-study to control the possible psychological damage it might inflict. Fervor, fervor. Behold the religion of gold in all of its glory; prophets everywhere and lost flocks desperately searching for sage guidance and salvation.

“Some say, “Yes! Physical gold!”; others are crying, “gold ETFs”. And still others: “Forget gold – SILVER!!!” And some disagree completely and proclaim, “Neither. It’s a bubble.” writes one Seeking Alpha market blogger. Meanwhile, the very bull camps that speculate that the GLD has nothing but air bubbles occupying its various vaults,…praise the six tonne addition in balances that took place on Friday as the harbinger of more sweet price ‘manna’ to come from Gold Heaven.

Will the Fed Giveth? One sure must hope so (and not just for the sake of the economy)…

Jon Nadler is a Senior Analyst at Kitco Metals Inc. North America

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About the Author
Jon Nadler Jon Nadler is a Senior Analyst at Kitco Metals Inc. North America
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