Precious Metals Q&A: Central Banks, Interest Rates And The US Economy
Here are edited excerpts.
Q: U.S. economic data has arguably been the strongest driver of global gold prices in the past year. What’s your take on this relationship?
A: It has been dependent on U.S. economic data, but mainly because the ETF [exchange-traded] fund paper market has really dominated gold in price movements. Investors were moving into gold as that safe haven trade -- so as we saw more indications that the U.S. economy and the global economy in general was improving, we saw investors abandoning those safe haven trades, especially by selling the ETFs. They [ETFs] are obviously the easiest way for individual investors and funds to participate in the precious metals market.
Q: U.S. economic, housing and jobless claims data came out Thursday morning. How is gold likely to react to that data?
Today, I think prices are less dependent on the data. Jobless [unemployment benefit] claims came in just as expected. What I thought was interesting: The continued claims number stayed above 3 million. That’s in spite of the fact that a large number of people were taken off jobless claims at the end of the year, when the claims expired [due to Congressional failure to extend emergency unemployment benefits]. That is a worrying number for the labor market – that the continuing claims number is so high. That has maybe contributed to some of the price appreciation we’ve seen in gold this morning.