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« Gold To Obliterate The Resistance Level Of $1350/Oz | Main | Silver Prices are struggling to say above the $16.00/Oz level »

The Beaten Down Gold Sector Starts To Punch Back


We have long held the opinion that the fortunes of the precious metals sector is largely dependent on the action or lack of it by the Central Bankers. Of note is the Federal Reserve who have now taken their foot off the accelerator regarding rate hikes in the US. We have stated that we doubt that we will get any rate hikes this year and we might even get a rate cut as the Fed remains “data driven” and has adopted a dovish stance regarding monetary policy.

Central Bank actions regarding monetary policy

There are also other Central Bankers which we need to be aware of as their actions can contribute to the expansion or contraction of the money supply such as the European Central Bank (ECB) and the Bank of England (BOE), etc. On Tuesday the governor of the Bank of Japan (BOJ), Haruhiko Kuroda, gave notice that the central bank was ready to ramp up stimulus if sharp rises in the yen damaged the Japanese economy and undermined his strategy of achieving a 2% inflation target. As we all know money knows no boundaries and will migrate across borders in the blink of an eye. Inflating the money supply tends to weaken a currency and the Yen did fall on this news from the BOJ. It is difficult to make a direct correlation between the Yen weakening and gold prices rising but gold did trade higher following this piece of news.

On the horizon the president of the ECB, Mario Draghi and the governor of the BOE, Mark Carney, are soon to leave their posts. The loss of familiar faces creates a certain amount of uncertainty as we do not know who will replace them and what sort of strategy they will adopt when managing monetary policy. If the replacements are of a dovish disposition, then we would expect gold and silver to be the beneficiaries.

Gold Surges To 11 Month Highs

As we can see from the chart below gold has reacted positively since the golden crossover so we would now like to see gold prices get above the $1370.00/Oz level and settle there. The technical indicators remain in the overbought zone suggesting a near term pullback, but they could also stay there for some time before unwinding. Gold has rallied well since Labour Day and is gaining a tad more air time which is positive for gold bugs.


Gold Miners Are finally on the move

The precious metals stocks are now flirting......................


 gold is has come to life but the stocks need to do a lot more than they have.....

If you would like to know which stocks we are buying and selling please join us atStock Trader our premium investment service.

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