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Los Angeles CA, (Tangible Investments) - by James O'Dell - Gold and Silver prices retreated in early trading on Monday, as Gold dipped 0.55 percent to $1,072.10 an ounce, nearing six year lows, after easing $4.30 or 0.40 percent on Friday to finish the week at $1,078.00 an ounce, as the dollar hit 7-month highs on the prospect that the Fed will hike interest rates at its December Federal Open Market Committee (FOMC) policy meeting. Silver slipped 0.85 percent to $14.05 an ounce on Monday, after easing $0.10 or 0.70 percent on Friday, to end the week at $14.17 an ounce, while the Gold/Silver ratio edged up to 76.08.
The week began with reports of the tragic terrorist attacks that took place in Paris on the previous Friday, showing that geopolitical risk remains high around the world, and explains the continued safe haven demand for Gold. The terrorist attacks triggered a rush of Gold buying on Monday morning, and it shows that investors will instinctively turn to Gold in times of uncertainty. The Gold price rose briefly on Monday to $1,097.90 an ounce following the attacks, but failed to maintain those gains.
Many are now awaiting a 25 basis point rate hike in December, the first in nearly a decade, but there is little reason to believe that Gold will decline much further than where it is already. Many are even making the case that the last couple of months may have formed a double bottom in Gold which could provide a decent entry point for long term investors.
HSBC analysts said that “we expect low prices to revive coin and bar demand. This should extend to the emerging markets. Low prices should trigger greater demand, although this may take time to feed into prices.”
The dollar declined against a basket of major currencies following the release of the minutes from the October 27-28 FOMC policy meeting and analysts argue that it may take more than the proposed December rate hike to drive it higher. Minutes from the meeting showed most members thought that conditions for the bank's first rate hike in almost a decade could well be met by the time of the next meeting.
“The Gold market has factored in a December tightening of a quarter point,” said George Gero, of RBC Capital Markets Global Futures. “I think there is very little ambiguity now whether they’re pulling the trigger or not on Dec. 16." Policymakers are striving to alert the markets in advance that the tightening will likely be gradual, and that is a plus for Gold.
Meanwhile, look for our "Black Friday Super Sale" this week, and make plans to join us for "Small Business Saturday" on November 28, for a day of fun, raffles, and good deals in Laguna, sponsored by the Laguna Beach Chamber Of Commerce. There will also be a "Snap & Share" photo contest with a chance to win one of three major prizes, so don't miss it (see our Facebook page).
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