Gold Firms Within Recent Range

Gold continues to consolidate post-Brexit-vote gains. Yesterday's dip to the $1300 zone sparked some buying interest and the yellow metal is back above $1320 today.

Silver is offering some support as well. Silver is up more than 50¢ (2.8%). The January 2015 high at $18.48 was tested earlier in the session, which prompted the gold/silver ratio to retest the May low at 71.35.

Global stocks are on the mend, buoyed by the growing realization that the central banks will continue to backstop the market. While the ECB has apparently indicated that they are in no rush to ease, I'd guess that's a function of the market rebound. They'll keep their powder dry for now.

"If Brexit is used as an excuse, the central banks will print more money, QE4 in the U.S. is on the way and the depreciation in the purchasing power of currencies will continue," said renowned market analyst Mark Faber in a Bloomberg interview. "In that situation, you want to own some gold," Faber added.

As we've already discussed this week, Fed tightening plans are pretty much out the window at this point. Before the Brexit vote, the Fed had already adopted a more dovish tone, but there was still that lingering possibility of a rate hike before year-end. Not so much anymore. In fact, and I've said this in the past, I wouldn't be surprised to see a Fed rate cut before we see another rate hike.

Global growth was already on the ropes and Brexit creates additional headwinds. Central banks will attempt to mitigate those headwinds the only way they know how . . . with ever-easier monetary policy. And that's good for gold.