(Kitco) Wed. April 24th , 2019 – Gold and silver prices are right back up in early-afternoon U.S. trading Wednesday, on corrective rebounds following selling pressure from the $400 million Venezuelan , “gold dump” that Tuesday drove both metals to four-month lows.
Impressive for the metals bulls is the fact the U.S. dollar index hit a new multi-month high today, yet gold and silver still worked higher. However, little risk aversion in the world marketplace and a strong U.S. dollar at present are keeping buyers of the safe-haven metals timid. June gold futures were last up $4.60 an ounce at $1,277.80. May Comex silver was last up $0.134 at $14.92 an ounce.
The U.S. stock indexes are trending solidly higher and this week hit record and/or multi-month highs. With no major geopolitical hotspots in play at present, focus of traders and investors is on corporate earnings reports, most of which have been upbeat.
It’s quieter this week on the U.S.-China trade war front. Both sides are set to meet again next week. The U.S. is also discussing trade with Japan and other nations. The European Central Bank today declared the U.S. could be the main victim on trade because of its more aggressive stance toward its major trading partners.
Nymex crude prices on Tuesday pushed to a six-month high of $66.60 a barrel, with Brent crude trading above $74.00. Prices are modestly lower today on some profit taking. The other key outside market today finds the U.S. dollar index higher and hitting another multi-month high.
Gold Follows Oil, and Oil is up
The old fact that most investors miss is that gold follows oil as both commodities are necessary for financial markets to move up or down. When oil begins a rally , most times gold isn’t far behind. If we couple those facts with the low, or negative, real interest rates of today then paper money becomes cheap and the tangible, “real “ value of gold accelerates.
U.S. President Donald Trump is repeatedly enforcing a lower rate environment , criticizing Fed Chairman Jerome Powell for raising rates while the U.S. economy recovers. Ultimately, low rates drive gold higher and that policy has now been laid out as Chairman Powell has now announced a , “freeze” or moratorium on interest rates until the end of 2019, an unprecedented move by a U.S, Fed Chairman.
Venezuela Dumps $400 million in Gold
Low rates move investors to gold and oil is rising , but this latest retrenchment in gold prices can be largely traced to the dumping of gold by Venezuela. (9) tons, or roughly $400 million in gold was dumped on the market last week as Venezuela sells off reserves for desperately needed cash. This move will only hold gold down temporarily as countries central banks snapped up this, “gold dump” and gold is once again moving right back up from a $1,270 low , now closing in on $1,280/ oz and higher today, Wednesday, April 23rd, 2019.
Posted By :
Jack Dempsey , President
401 Gold Consultants LLC
jdemp2003@gmail.com