by Christine Kim, MineWeb.com
Gold’s trading range appears to have narrowed after yet another non-committal statement from the FOMC but price hit again when Draghi statement also makes no definitive promises..
One wonders whether some gold investors – and particularly gold traders – will ever learn. Yet again gold moved upwards. Back to around the $1620s ahead of the FOMC meeting – and again gold has plunged back down below the $1600 mark, before making a small recovery back above that level, as the Fed took no definitive action yet again. Whether it’s a statement from Ben Bernanke or the Fed committee, the result seems to be exactly the same. They will take action as necessary, but because it’s not jam today the market falls back in a wave of disappointment.
As London broker Canaccord Genuity succinctly put it “The FOMC’s tone was slightly more accommodative of further QE but stopped short of any extra measures. The committee will closely monitor incoming information on economic and financial developments and will provide accommodation as needed”.
Whether gold price movement either way is justified is a moot point. We are in the normally weak period for the gold price anyway as many New York traders and market movers are soaking up the sun and the heat, and the thunderstorms this year, in the Hamptons and gold market action is generally subdued. The big test is unlikely to come until September and the next FOMC meeting then will perhaps be a better pointer as to whether or not more easing is on the cards. The consensus is that it will be forthcoming at some stage unless there’s a remarkable turnaround in the U.S. economy and the labour market.