Gold up marginally ahead of ‘profoundly consequential’ Powell speech on Thursday

Gold up marginally ahead of ‘profoundly consequential’ Powell speech on Thursday by Michael J Kosares for USA Gold

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Gold is up marginally at the open with little in the way of news to push the price one way or the other. The markets essentially are on hold in anticipation of Fed Chairman Powell’s speech on Thursday in which he is expected to lay out policy ramifications headlined as “profoundly consequential” in a CNBC article yesterday. The gist of the article is that whereas Fed Chairman Paul Volcker forty years ago introduced policies to tame inflation, the current chairman will profess a commitment to igniting it – not that a massive pile of tinder hasn’t been built under the inflation rate already. The metals, despite the previews, are taking a wait and see approach.  Gold is up $1 at $1932.50.  Silver is 2¢ at $26.71.

Standard Chartered’s Suki Cooper cites the second strongest inflows to gold ETFs ever in the second quarter of the year as one of the prime reasons for gold’s strong performance thus far this year. “The largest purchasers [of gold ETFs] included those allocating to gold for the first time as well as established buyers,” she wrote in a report cited by Kitco News yesterday. “The top 15 holders of GLD, the largest ETP,” she points out, “represented 22% of total shares outstanding, whereas during the previous peak in 2012, the top 15 made up 45%, suggesting scope for growth. In our view, ETP holdings remain a key indicator. Not only does the flow show how strong strategic inflows are, but also offers clues to how resilient current metal held in trust is. … The balance of risks is to the upside. Gold prices are no longer technically overbought. Given that the longer-term picture remains constructive for gold, we still view price corrections as buying opportunities.”

In recent weeks, there have been reports that pension funds, sovereign wealth funds, and private capital have become buyers of the metals adding depth to a market already benefiting from the steady flow of capital from hedge funds, financial institutions, and central banks.

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