Gold steadied as investors paused after a record-breaking rally that saw futures touch 2,000oz for the 1st time.
Futures and spot prices backed off from the wide swings that shook the market earlier as traders assessed the outlook for a host of drivers including Fed policy, with the FOMC meeting this week.
A falling USD, the economic turmoil unleashed by the C-19 coronavirus chaos and expectations for more aid/relief/stimulus have driven COMEX gold prices up nearly 30% YTD.
Gold for Dec delivery rose 0.4% to settle at 1,963.90 an ounce at 1:30p on the COMEX in New York Tuesday. The precious Yellow metal swung between gains of up to 2.3% and losses of as much as 1.4%.
Spot gold rose 0.6% to $1,953.29ox. The metal’s 14-Day RSI has been above 70 for 6 sessions running, a technical signal to some traders that it is overbought and due for a pullback.
Silver fell as investors weighed whether The Devil’s Metal rose too high, too fast.
Spot silver slipped as much as 9.2%, the most since March, before paring losses. It had earlier climbed 6.6% to the highest since Y 2013.
The 2-day FOMC meeting concludes Wednesday, it may provide more direction. We expect Chairman Powell to signal that rates will stay near Zero for a long time.
The Dollar Spot Index was near the lowest mark in almost 2 yrs.
The uncertainty over outlook for The China Virus and the economy, suggests that the Fed will aim to keep interest rates toward the lower end of the fed funds target band ‘for as long as it takes’ , a Key phrase used in last month’s FOMC mins.
While prices wavered Tuesday, most market watchers are predicting more gains for both gold and silver.
There is a long list of Bullish drivers: USD remains weak, geopolitical tensions are rising, real rates have fallen, and governments and central banks worldwide have unleashed vast aid/relief/stimulus measures to resuscitate economies.
Early this year we raised our 12-month forecast for gold to 2,500, expecting further pressure on the Buck. We also see silver at 30+ driven North by higher gold prices and better prospects for silver industrial demand.
“As the dollar continues to fluctuate, most downward , look for gold and silver to be the alternate investment, because of the pressures from the growing Federal deficit blamed in part because of COVID-19 rescue efforts or more importantly, the wildly spending by Congress – especially on their pet pork barrel projects – which will due little to ease the pain of unemployment.
“Naturally, this will cause both to rise to new heights as it becomes the watchful eye of investors – a ranking in the favorites. Election year uncontrolled spending will be a major contributor to this. I expect gold to be in the $2,500 range by year-end with continued appreciation in 2021. Silver, the little brother to gold, should follow a similar pattern to gold but at a slower pace.” says economist Bruce WD Barren
Have a healthy day, Keep the Faith!