Gold meanders at lower end of trading range in featureless market

Gold meanders at lower end of trading range in featureless market by Michael J Kosares for USA Gold

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Gold meandered at the lower end of its trading range in overnight markets. The featureless market of the past few days has coincided with a firmer dollar generally and improved, though still tenuous, sentiment on the direction of the economy. The downside for both metals is also a continuation of the profit-taking and technical selling that has gained momentum in the background over the past couple of weeks. Gold is down $8 at $1937. Silver is down 39¢ at $27.13. For a wider, somewhat offbeat perspective on the current gold market, we turn to analyst Louis-Vincent Gave and remarks posted at the Evergreen Gavekal website.

“For millennia,” he says gold has been valued for its beauty, which may explain why it becomes more attractive as its price rises. The new thing – certainly in 2001-11 – was most new wealth being created in emerging markets, where investors have a strong cultural affinity for gold. In contrast, the past decade saw most of the world’s wealth created around technology campuses on the US west coast by people with scant interest in the ‘barbarous relic’. This is interesting, as gold has ripped higher in the past two years in spite of a market consensus that global wealth creation in the coming years will match that of the last decade. In short, gold is showing strong momentum despite emerging markets having broadly been dogs with fleas for a decade. Imagine if the dollar is now done rising and EMs, led by Asia, again thrive. What a tailwind that would be for gold.”

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