Los Angeles CA, May 14 (Tangible Investments) - by James O'Dell - Gold and Silver prices added to gains on Thursday after Gold surged $21.80 or 1.83 percent on Wednesday, hitting a 5 week high and closing at $1,215.40 an ounce on short covering and bargain hunting as the dollar neared a 3 month low after weak U.S. retail sales. Silver rallied $0.59 or a whopping 3.57 percent to close at $17.13 an ounce, while the Gold/Silver ratio dropped to 70.95.
U.S. retail sales for April, one of this month's most important economic reports, remained unchanged from March, on expectations of a 0.2 percent increase, calling into question once again when the Fed will hike rates. "This broad-based weakness in the U.S. retail space confirms our belief that the Fed's hands are tied at the moment," said Phillip Futures' Howie Lee. "I'm forecasting Gold to average $1,200 this quarter, as a slightly weaker dollar will continue to be supportive until we see some stronger data points," said David Wilson of Citigroup.
An industry report released today shows that China was the biggest Gold consumer in the world during the first quarter, far outpacing India. Market analyst Jim Wyckoff says that there is more to the jump in the Gold price than just poor data. Wyckoff notes that there are “underlying factors lending support to the Gold market, including a recent slump in the U.S. dollar index, some safe-haven demand due to Greece worries about their debt restructuring negotiations and also the recent rout in world bond markets."
Meanwhile, Former Fed Chairman Alan Greenspan joined a growing chorus in warning investors of another ‘taper tantrum’ in their futures. "Just remember we had the 'taper tantrum.' And we're going to get another one," said Greenspan at the Global Private Equity Conference on Wednesday. "This is a very tough period to get through," said Greenspan, as he spoke to the Fed's decision to start raising interest rates. "Normalization is great, but the process of getting there is going to be very rocky."
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