What can speculators expect from precious metals?
Gold continues to remain within a tight trading range between 1225-1250 well above its expected price. Most analyst forecast gold to be trading in January around the $1180 price level. Gold bulls have been able to successfully fend off the 1200 price with gold falling for just a short time under the psychological 1200 level. There is very little hope for gold, as its hangs on to the edge of the cliff for dear life it is just a matter of time before the fall comes. Gold is trading at 1226.30 at the very bottom of its range.
Gold has lost its appeal of late as a hedge against inflation as Mr. Bernanke has gently guided the Federal Reserve stimulus program through the difficult double edged sword of stimulating the economy and pushing up inflation With the Fed beginning their tapering early than expected there is little likelihood that inflation will skyrocket anytime soon in the US as it remains below expectations.
Gold’s 2nd appeal is for wealth retention, gold has and will continue to steadily increase in value and is a perfect place for long term investing except during economic periods when the prices are pushed up by artificial means. With gold expected to decline to the low 1100 range, this is not the time to enter the gold market to retain wealth as it will take years to recover pass the purchase price.
Lastly gold is a great safe haven, the price of gold skyrockets during geopolitical and economic crisis and returns to its value after these events. After almost 6 years of economic turmoil combined with political crisis mostly from the Middle East, today investors see a calm political climate and a global recovery underway. So once again gold has no appeal.
As gold loses its shine it takes the luster off of the other metals that are part of the precious metals family. Silver is trading at 19.627 adding 88 points today after a strong tumble earlier in the week. Strong economic growth is helping the metal that is classes both as a precious metal and an industrial metal. Platinum is trading at 1419.55 in the green this morning along with palladium which is up $3.30 at 740.10 supported by the growing demand from the auto industry. Palladium is used to produce catalytic converters for automobiles, therefore as the economy improves so does the demand for this semi-precious metal.
Copper is not classed in the precious metals family but it is shiny brighter than gold these days, trading at 3.351 well above its average trading range. Copper the leader of the industrial metals that is used in everything from home construction to manufacturing is seeing demand skyrocket as the housing market recovers and manufacturing expands. Copper fell by 0.5 percent on the back of mounted expectations of further QE taper by the Federal Reserve after minutes of FOMC meet were released yesterday. Also, strength in the DX coupled with mixed global market sentiments acted as negative factors. However, decline in LME inventories along with positive economic data from the Eurozone cushioned sharp downside in prices