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 Gold continues to trade in a somewhat choppy manner within the
recent range. While the yellow metal retreated into the Londod PM fix, those
intraday losses have been recouped and gold is now up about $5 on the day.
Some generally firm U.S. data modestly raised Fed rate hike expectations,
keeping the dollar fairly well bid and perhaps limiting the upside for gold.
Better than expected housing starts and industrial production in April offer
some encouragement for the economy. The 0.4% rise in CPI, while in line with
expectations, was the biggest monthly gain in more than 4-years.
Whether inflation is actually gaining traction or not remains to be seen. If
there is confirmation in the months ahead, it may indeed prompt the Fed to
move on rates again before the end of the year. However, if the overall bias
on prices remains flat to negative, the Fed will continue to be on hold.
Even if inflation picks up, it should be good for gold. Gold is of course the
classic hedge against rising prices...err, debased currency. Given that
central banks have such a strong desire to generate inflation, I've always
thought they would eventually get their wish. However, I have likened it to a
bull pushing against the door of a china shop, once the door gives way and
the bull is inside . . . there's no telling the damage that might be done . .
.
Get yourself some gold while prices are still relatively low. Then stand
aside and avoid getting gored while the central banks scramble to get the
bull back out of the shop.
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