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Hathaway: Gold May See $100 Up Days With Monetary Easing

Release Date: 
Wednesday, August 1, 2012

Gold prices fell as better-than-expected U.S. employment data for July pressured the euro and gold. The private sector added 163,000 jobs, beating forecasts for 120,000.  Gold was down $15.10 at 7:21 a.m. Pacific Time on the New York Spot Market, trading at $1,600.80 per ounce.  Spot silver was $.68 lower, trading at $27.42 per ounce.  (Click here for the most current spot prices.)

“Precious-metals markets are waiting for comments from the ECB and FOMC, to see if any guidance of more decisive action and, ultimately, balance-sheet expansion is given,” said Nick Moore, head of commodity research at Royal Bank of Scotland Group Plc in London, in a report. “QE3 remains a possibility further ahead,” he said, referring to further quantitative easing.

Deutsche Bank analyst Michael Lewis expects central banks to inject new liquidity into their economies in late August or early September.  "By September, the possibility of more monetary action could be the trigger for a bit of a recovery to take hold," he said.

John Hathaway, manager of the Tocqueville Gold Fund, said the Fed is close to acting and it is most likely going to do something, “... on a very big scale.”  “[T]he Fed is starting to feel some real pressure to act on their dual mandate, (one of) which is to get the economy going.”  Hathaway noted that such action from the central bank could have a significant impact on gold prices, saying “…once the Fed casts the die and it’s clear which way they are going, I think we should see triple digit ($100+ up-move) kinds of days.”

 

(Sources:  “PRECIOUS-Gold prices fall ahead of Fed announcement,” Reuters, August 1, 2012; “Gold Is Seen Advancing On Speculation About More Easing,” Bloomberg, August 1, 2012; Hathaway - We Are About To See $100+ Up Days In Gold,” King World News, July 29, 2012)

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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