The price of gold opens up the trading week slightly lower on light trading volume overnight. Gold received a boost last week from a weaker dollar index. The dollar index fell Friday to 95.38, the lowest since July 5th this year.
Second quarter GDP reported at 1.2 percent, way below the estimate of 2.6 percent. This report continues to weaken the FED hands on the prospect of raising rates anytime soon. So in turn, with that news and the weaker the dollar, the price of gold rallied to current levels seen today. Now with no pending news for the market to digest, I expect gold to trade in a tight range again at these levels.
Silver still well supported over the $20 dollar level, even with many dealers sitting on excess inventory. Dealers continue to lower their bids on silver products, as some indicated this morning they are holding more inventory then they want to. As the market experiences the summer doldrums, I expect dealers will be lowering their bids further as some indicate enough is enough. Lowering their bids to unattractive levels will result in clients looking elsewhere for better prices. That’s a strategy that might come back to haunt them, but in some cases they have no choice.
The price of oil is on a slippery slope once again as some traders are expecting the price to test the $ 40 level. IEA (the International Energy Agency) reported that they estimated the second quarter 2016 worlds’ oil supply of crude exceeded demand by 200,000 barrels a day. A strong case for lower prices is ahead.
A couple of Wall Street Gold traders I spoke to this morning tell me they will be trading oil today instead of gold. As one guy put it, trying to be funny, “I’m going in for an oil change today.” The traders I spoke with believe that with the attractive volatility, trading oil seems more exciting and will give them better opportunities to make a short term profit.
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