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Momentum Players Returning To Gold
Posted May 16th, 2014
Los Angeles CA, May 16 (Tangible Investments) - by James O’Dell - Gold and silver prices retreated on Thursday with gold easing $9.11 or 0.70 percent to close at $1,296.10 an ounce, but still up 0.6 percent on the week due to earlier gains from the geopolitical uncertainty surrounding Ukraine, as stocks fell for a second day in a row after a raft of mixed economic data. Silver dipped $0.22 or 1.13 percent to close at $19.53 an ounce, while the gold/silver ratio rose to 66.53.
"Despite Thursday's modest sell-off in gold, we remain constructive on the precious metal short term, as there are too many geopolitical hot spots that still have the capacity to flare up rather unexpectedly," said INTL FCStone in a note. Fed Chair Janet Yellen, just last week admitted that the U.S. economy was still in need of a “high degree of monetary accommodation,” and she cited “heightened geopolitical tensions,” as well as a slowdown in housing as risks.
The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released on Thursday, showed builder confidence in May falling to 45 from a downwardly revised April reading of 46. “After four months in which the HMI has shown little signs of fluctuation, it is clear that builder sentiment is becoming more in line with the market reality of a continuing but modest recovery,” said NAHB's Kevin Kelly.
Meanwhile, the cost of living rose in April by the largest margin in nearly a year, and it's a sign that inflation may be picking up as hiring increases in the world’s largest economy. “Central banks across the globe have pumped in a lot of money into the system, and that at some point will trigger inflation,” said Peter Sorrentino, of Huntington Asset Advisors, in a telephone interview.
“We probably could see some momentum players return to the gold market.” Money managers have raised their bets on a gold rally by 14 percent as of May 6, that's the most since February, according to the U.S. government. The holdings are up more than 3 times over last quarter.
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