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Gold Dives Deeper into Rangeby Peter A. Grant
Dec 20, AM 
Gold came under renewed selling pressure on Thursday, weighed by a bigger than expected upward revision to U.S. Q3 GDP, which diminished the yellow metal's appeal as a safe-haven. Gold fell to a new four month low, pushing below the 200-day moving average and leaving the market fully entrenched in the lower half of the $400 dollar range that has dominated for the past year.The third report for U.S. Q3 GDP came in at 3.1%, on expectations of 2.8% and 2.7% previously. With Fed QE now tied to employment, better than expected economic growth raises the possibility that the Fed may be able to remove extraordinary accommodations ahead of schedule. Right now, Fed central tendencies suggest the potential for the jobless rate to dip below the targeted 6.5% level sometime in 2015. We've seen these kinds of so-called "green shoots" in the past (remember the "recovery summer" of 2010?) only to have harsh reality settle back over markets. With the fiscal cliff still looming and our national debt near the $16.4 trillion ceiling, there's plenty to still be worried about on the recovery front. The Fed has already committed to $85 bln in asset purchases per month beginning in January, so their balance sheet is headed toward $4 trillion. Even if we were to reach 6.5% unemployment in say late 2014, that balance sheet would be well in excess of $4 trillion by then. As a result of this debasement, the dollar has come under pressure, dropping to new eight-month lows against the euro. The dollar index has fallen back to 79.00, levels not seen since mid-October. While the dollar and gold have become correlated in recent weeks, the more traditional relationship tends to be inverse. Once the short term speculators are flushed out of the paper market, we anticipate that gold will rebound. Physical buyers have already been taking advantage of these lower prices We've seen this play-out time and time again throughout the secular bull market. Note: I will be on holiday beginning 21-Dec. This page will not be updated in my absence. Please see our Breaking Gold News page for updates. Merry Christmas and Happy New Year to all. NEWSLETTER SIGN-UP Opinions expressed in commentary on the USAGOLD.com website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. USAGOLD, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD does not warrant or guarantee the accuracy, timeliness or completeness of the information found here.
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