Gold Price Under Pressure, Struggles To Find Clear Direction, Silver Hits 6-Week Low
New York (Aug 26) Gold and silver are both solidly lower in U.S. trading Wednesday, pressured by rallies in most major world stock markets.
One senior market trader explained that there is too much noise in the market for gold to find a clear direction. “We don’t have a clear path here -- the way the currencies are moving back and forth are having a dramatic impact on gold. Gold is moving at a slower pace,” said Todd Bubba Horwitz of the Adam Mesh Trading Group.
December Comex gold was last down $13.30 at $1,125.10 an ounce. However, Horwitz added that he still likes the gold space and would not be surprised to see the metal head back to last week’s highs. “I think eventually gold will make its way back up -- it has an outstanding chance of hitting $1,200,” he told Kitco News.
For now, the senior trader said the metal is ‘churning’ in this range but overall, it is a good, long play.
September Comex silver hit a six-year low this morning and was last down $0.465 at $14.14 an ounce, but Horwitz said the metal has a lot of potential. “I like silver more than gold, it has a much bigger upside and can double and triple -- but not tomorrow,” he said. “You want to start accumulating silver at these levels.”
China was still the focus Wednesday after the People’s Bank of China (PBOC) injected $22 billion into its financial system to boost its flailing stock market. After a volatile session that saw prices trade on both sides of unchanged, China’s Shanghai stock index ended down 1.3% on the day.
“China is probably the biggest seller of gold but I also think they are silently buying -- that is one of the reasons we are seeing pressure on the metal -- they are being forced to openly liquidate on the market some of their positions because they are some of the biggest holders,” Horwitz said.
Later this week U.S. Federal Reserve officials gather in Jackson Hole, Wyoming for their annual meeting to discuss monetary policy and other economic issues. Past meetings have produced news that moved the markets. Fed Chair Janet Yellen will not attend this year’s meeting in Jackson Hole.
Horwitz is not optimistic for a clear direction from the central bank. “The Fed has no clue and they are debauching the entire economy,” he said.
“Don’t be surprised if they come out with QE4 program,” he concluded.
Source: KitcoNews
