Investors were dabbling in gold and silver as protection Tuesday, but were distracted by a stronger stock market in the U.S as it rebounds after four straight sessions of losses. If equities see a bounce Tuesday, gold and silver might come under pressure. But if stocks continue their downtrend, gold and silver could see higher prices as investors look for a safe place to stash cash.
Gold has also been stealthily zeroing in on its record close of $1,557.10 an ounce. Its record intraday high is $1,577.40, but a new record settle could put the metal back on investors' buy lists especially if fund managers jump back into the market.
Phil Streible, senior market strategist at Lind-Waldock, said gold will resume its uptrend "as long as we stay above $1,515." Streible sees prices between $1,580-$1,620 an ounce once gold sees a two-day close above the $1,550 level.
A weaker dollar should help gold and silver prices. The U.S. dollar index is currently down 0.53% at $73.60 as the European Union, IMF and European Central Bank seem intent on helping Greece out of its fiscal crisis.
There are also increased expectations that the ECB at its meeting Thursday could signal an interest rate hike of 25 basis points in July. The key phrase will be "strong vigilance," which has been the signal of a rate hike in the past. Inflation was reportedly 2.7% in May above the central bank's 2% target rate. A rate hike would give more confidence to the euro and pressure the dollar.
Streible points out that gold has been moving with the dollar recently, disrupting their typical inverse correlation, but a weaker dollar makes gold cheaper in other currencies, which will only add to its appeal. Streible isn't scared off by high prices and urges investors who aren't exposed to gold or silver to dollar cost average each month, or buy a set amount of the metals regardless of price.
Gold mining stocks were slightly higher. Barrick Gold(ABX) was up 0.51% at $45.72 while Newmont Mining(NEM) was adding 0.56% to $53.74. Other gold stocks, Goldcorp(GG) and AngloGold Ashanti(AU) were trading at $48.71 and $44.42, respectively.
Gold and silver prices Outlook and Analysis :
Gold price inclined during June (up to yesterday) by 0.7%, while silver price fell by 4%, mostly due to its decline at the first couple of days on June.
The current situation in the U.S. and Europe draw most of the financial community’s attention as the two economies are trying to get over their recession and debt problems.
Currently, it’s not clear which economy will prevail that will determine the direction of the Euros to USD exchange rate and consequently the direction of gold and silver prices; if the US dollar will weaken, this might strengthen gold and silver prices.
Today’s speech by Bernanke might indicate what’s the next move of the Fed, which might drive US dollar’s value down and if so, might push back gold and silver prices back up. On the other hand,
In the mean time, I still speculate that gold and silver prices will maintain their current price level until a new development will occur in the financial markets.
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