Gold and Silver Outlook both Seen as Gloomy but Some Glimmers of Brightness

Source:

Given the fact that the US economy is far from being out of the woods" say analysts on the report Matthew Turner, Jessica Cross and Gary Mead, "the abrupt recovery in the dollar can only be explained by a widening investment view that America may offer the least-worst haven right now.

In its latest review of the global metals market for Fortis Bank, UK economic research group Virtual Metals notes that metals had a torrid time in July and early August as concerns about demand being hit by a combination of higher prices and slowing economies have taken centre stage. Some aspects of the analysis on precious metals are noted here, although the full report also covers industrial/base metals and plastics too.

"Given the fact that the US economy is far from being out of the woods" say analysts on the report Matthew Turner, Jessica Cross and Gary Mead, "the abrupt recovery in the dollar can only be explained by a widening investment view that America may offer the least-worst haven right now. Whatever the wisdom of that attitude the higher dollar has also knocked metals back, probably to levels at which buying, certainly in gold, given that inflation remains a threat everywhere, might return rather sooner than later."

Overall though, the analysts see the market as ‘gloomy', given that even wars, bombs and potential bank collapses - normally fodder for gold price increases - seem to be unable to pick gold off the floor. A shakeout of longs was probably overdue, but might not be over given the volume of gold held in ETFs has, as the analysts point out, hardly fallen at all. But short-term the dollar rally might run out of steam and give gold some breathing space. They predict a short-term London pm fix of $780/oz- $840/oz. Indeed some of this actually happened at the end of last week.

Related Articles

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe