Gold Flat in Pre-Holiday Trading
Posted by Brian Ford on November 25, 2014
The gold spot price remained firm above the $1200 per ounce mark throughout today’s trading session, and Certified Gold Exchange analysts believe fluctuation in the price of the yellow metal will be minimal until after Thanksgiving. Since gold’s meteoric rise from $252 per ounce in 2011 to $1900 in 2011, and even during gold’s lackluster past two-and-a-half years, the last week of November has historically been quiet on all gold investing fronts.
This is not to say that there has been a lack of data for investors to pore over. Just today the U.S. Commerce Department released projections stating that our nation’s third-quarter GDP rose as much as 3.9% – although that figure is likely to be revised downward over the coming months.
Any negative effect that GDP news might have had on the gold spot price was negated by a report from the U.S. Conference Board. The Board found that consumer confidence fell to 88.7 from a previous reading of 94.1. “Consumer confidence retreated in November…consumers were somewhat less positive about current business conditions and the present state of the job market,” said Conference Board director Lynn Franco.
Indexes that track the percentage of the gold spot price’s movement due to trading compared to the percentage change due to dollar devaluation found today that investors were selling gold slightly more than they were buying, but a nominal decline in the U.S. Dollar Index overshadowed the selling to help gold finish today with a meager $0.10 gain. “We probably won’t see much movement in the market until Friday, and that may be a stretch,” said CGE analyst Greg Gainer. “We’re expecting the market to see a boost from holiday buying and end-of-year investing, but fluctuation in the price of gold itself will depend on the government’s continued dilution of the dollar as well as any comments made by the Fed regarding interest rates, which are sure to rise in 2015. We all know how that worked out for gold the last time.”
For the record, the last time the U.S. economy went through a rising interest rate cycle, the gold spot price grew by more than 1000% as interest rates rose from 4.5% in 1960 to 21.5% in 1980. The Federal Reserve’s current prime lending rate is under 1%, which is the lowest in the history of our nation as lawmakers struggle to boost our waning economy by handing out what is effectively free money to corporate America and to U.S. central banks.