Thin Volumes Mask an Intense Battle as Gold Nears Top End of Range (GLD) (IAU) (SLV)
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Despite thin volumes, the price of spot gold is closing in on the upper end of its trading range. It currently trades at $1620 per ounce, just below resistance at $1630. Since June, the price action in gold has been choppy to say the least. Bulls continue to peddle the inflation story in the U.S., while bears cry, "Inflation? What inflation?"
Will Bernanke Deliver?
With the unemployment rate in the U.S. still stuck above 8 percent, traders are buzzing that the Fed will once again reach into its bag of tricks at its upcoming Jackson Home event at the (usual near the end of August) and the FOMC meeting September 12-13. The latest chatter calls for another round of stimulus which would likely include bond buying.
>From a gold trader’s perceptive, bulls are all for bond buying and any
other policy move that would stoke inflation. But bears say more QE isn't necessarily a done deal, and even if it is, there is a likelihood that it and the perceived inflationary pressure it would create are already factored in. So, unless the Fed really kicks QE into high gear, the effects on the price of gold is likely to be minimal and any rally in the gold will offer an opportunity to short.
iShares Gold Trust ETF (NYSE: IAU) and SPDR Gold Shares ETF (NYSE: GLD) is higher by nearly 1 percent this week. Year-to-date, SPDR Gold Shares (NYSE: GLD) is trading mostly flat. Despite a high correlation with gold, iShares Silver Trust (NYSE: SLV) is trading lower by 5.3 percent so far this year.
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Will Bernanke Deliver?
With the unemployment rate in the U.S. still stuck above 8 percent, traders are buzzing that the Fed will once again reach into its bag of tricks at its upcoming Jackson Home event at the (usual near the end of August) and the FOMC meeting September 12-13. The latest chatter calls for another round of stimulus which would likely include bond buying.
>From a gold trader’s perceptive, bulls are all for bond buying and any
other policy move that would stoke inflation. But bears say more QE isn't necessarily a done deal, and even if it is, there is a likelihood that it and the perceived inflationary pressure it would create are already factored in. So, unless the Fed really kicks QE into high gear, the effects on the price of gold is likely to be minimal and any rally in the gold will offer an opportunity to short.
iShares Gold Trust ETF (NYSE: IAU) and SPDR Gold Shares ETF (NYSE: GLD) is higher by nearly 1 percent this week. Year-to-date, SPDR Gold Shares (NYSE: GLD) is trading mostly flat. Despite a high correlation with gold, iShares Silver Trust (NYSE: SLV) is trading lower by 5.3 percent so far this year.
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