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Gold Underpinned by Physical Demandby Peter A. Grant
Apr 24, AM 
Gold has retraced yesterday's losses, pushing briefly back within striking distance of Monday's high at 1439.00. Strong physical interest continues to underpin the market, which is apparently making some of the speculative sellers of gold nervous.It was widely reported yesterday that Goldman Sachs got stopped out their short position in COMEX gold futures on the rebound above $1400. You may recall that that Goldman revised their gold forecast down two weeks ago, which may have contributed to the sell-off in the paper market. Durable good orders for March missed badly, providing the latest indication that the U.S. economy is not recovering in a manner that many had hoped for. Durable goods orders tumbled -5.7% in March, well below market expectations of -3.0%. The February print was revised lower as well from +5.7% to +4.3%. Much of the selling pressure seen in gold earlier in the year was attributable to allocation shifts out of safe havens and into equities based on some expectation that the economy was on the mend. That is simply not being born out by the data. If the stock market starts to suffer as a result of this reality, those same investors that were ditching their gold ETFs to pile back into shares, might just start reversing those trades. Additionally, if the data continues to disappoint, those convinced that the Fed would start removing accommodations sooner rather than later may have to rethink their positions. It has been my position that the Fed isn't going to start tightening until sometime in 2015. Basically, I'm inclined to at a minimum believe Bernanke, who has repeatedly said they will continue with ZIRP and QE until the jobless rate falls to 6.5% or inflation rises to 2.5%. Neither is going to happen any time soon. 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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