Gold Laughs in Draghi's Face; What Does it Mean? (GLD) (IAU)
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With the S&P 500 and other indexes significantly higher, traders have noted a curious reaction in the gold market, or perhaps we should say, the lack thereof.
SPDR Gold Shares (NYSE: GLD) is higher by 0.44 percent compared to the S&P 500 which is higher by nearly 2 percent. While it is tempting to dismiss this as unimportant, that could be a mistake, especially considering the way gold reacted immediately following Draghi's comments - they declined slightly.
There are several explanations for the unusual reaction, say traders. The first possibility is that Draghi's comments were not a surprise to gold investors. After all, GLD has gained 5.6 percent in the past 30 days, so maybe they were ahead of the curve compared to equity investors.
On the other hand, perhaps gold traders are adjusting their bets for ECB 'sterilization,' which would tamp down any sort of inflation created by the ECB's bond-buying plans.
Or, perhaps gold traders simply aren't concerned with what is happening in the euro zone, at least not when compared to what is happening in the U.S. ADP private sector employment data released today point to a larger than expected jobs number tomorrow. If so, some think there is a chance the Fed may keep its bazooka under wraps, or at least delay firing it.
We will know more tomorrow when the official jobs data is released and how investors react. Also, an all-important FOMC two-day meeting is scheduled September 12-13, Needless to say, it could get interesting.
SPDR Gold Shares (NYSE: GLD) and iShares Gold Trust (NYSE: IAU) are higher by 6 percent year-to-date.
SPDR Gold Shares (NYSE: GLD) is higher by 0.44 percent compared to the S&P 500 which is higher by nearly 2 percent. While it is tempting to dismiss this as unimportant, that could be a mistake, especially considering the way gold reacted immediately following Draghi's comments - they declined slightly.
There are several explanations for the unusual reaction, say traders. The first possibility is that Draghi's comments were not a surprise to gold investors. After all, GLD has gained 5.6 percent in the past 30 days, so maybe they were ahead of the curve compared to equity investors.
On the other hand, perhaps gold traders are adjusting their bets for ECB 'sterilization,' which would tamp down any sort of inflation created by the ECB's bond-buying plans.
Or, perhaps gold traders simply aren't concerned with what is happening in the euro zone, at least not when compared to what is happening in the U.S. ADP private sector employment data released today point to a larger than expected jobs number tomorrow. If so, some think there is a chance the Fed may keep its bazooka under wraps, or at least delay firing it.
We will know more tomorrow when the official jobs data is released and how investors react. Also, an all-important FOMC two-day meeting is scheduled September 12-13, Needless to say, it could get interesting.
SPDR Gold Shares (NYSE: GLD) and iShares Gold Trust (NYSE: IAU) are higher by 6 percent year-to-date.
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