Positive Portents Still for Gold and Silver

Source:

...Overall though it will probably remain the strength of the US dollar which governs the principal movement pattern in the gold price and there is no sign yet that the semi-controlled dollar devaluation policy being exerted by the US Fed through interest rate cuts is drawing to a close

...What are the portents? Overall still positive for all we would feel. In supply/demand terms gold is likely to remain strong, with one of the world's largest producers, South Africa's Gold Fields, for example, forecasting a 20-25 percent fall in its March quarter production due to the power outages earlier in the month and only being able to continue to operate at around 90 percent of its ideal power supply levels. Indeed the miner puts ongoing production losses as a result of the continuing electricity cutback at 15-20 percent and predicts nearly 7,000 job losses as a result.

Gold Fields is unlikely to be unique among South Africa's deep gold miners so we can expect similar losses elsewhere and with South Africa still probably the world's largest producer last year, albeit by a tiny margin over China, these losses have to be significant for the market helping to underpin the price...

Overall though it will probably remain the strength of the US dollar which governs the principal movement pattern in the gold price and there is no sign yet that the semi-controlled dollar devaluation policy being exerted by the US Fed through interest rate cuts is drawing to a close. Analysts are looking for another half percent cut, although there is the possibility that if this doesn't occur there may be a blip in the advancing gold price pattern.

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