Los Angeles CA, July 30 (Tangible Investments) - by James O’Dell - Precious metals prices retreated modestly on Tuesday with Gold sliding $5.90 or 0.45 percent to close at $1,298.55 an ounce as investors await the Fed's policy statement at the end of the two day Federal Open Market Committee (FOMC) meeting later on Wednesday. The price of Silver eased $0.01 to close at $20.58 an ounce, while the Gold/Silver ratio, the measure of the number of Silver ounces needed to buy an ounce of Gold, fell to 63.10.
In its advance estimate of the second quarter U.S. gross domestic product (GDP) numbers, the Commerce Department said on Wednesday that GDP rose at a seasonally adjusted annual rate of 4 percent. The increase was a marked improvement from the first quarter, when the GDP fell by a revised 2.1 percent. The forecast was also well above consensus estimates that called for GDP to climb from between 3 and 3.2 percent.
Meanwhile, when asked what was driving the Gold price, and if there can be a sustainable bottom, Peter Boockvar of The Lindsey Group answered, "I think the most interesting sign of a sustainable bottom in Gold, from a bear market that is almost 3 years old, was the $41.40 spike higher the day after (Fed Chair Janet) Yellen's June press conference."
Boockvar continued that "It was the first time that a market, by way of its response, disagreed with the Fed's assessment on inflation and the state of employment…I think Gold bears were reminded by Yellen that while she may have to raise rates sooner than she wants to because of the trend in inflation and employment, she will be so slow in doing so in terms of pace, that real interest rates will remain very negative for a long time to come, and that is the key bullish factor for Gold," he added.
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