CelticGold Market Report 19th December 2014
Gold’s volatile price pattern continues as the markets fluctuate between risk off and risk on. Traders and investors have become completely dependent upon the words and actions of the worlds Central Banks. This was no more evident than Thursdays price movements.
A slight rebound in oil prices combined with an announcement from the US Fed that interest rates will not rise anytime soon was cheered by investors. The German DAX, the UK’s FTSE 100, and the French CAC 40 all rallied over 2%. The US Dow Industrials had its largest gain since 2011 on Thursday.
The market response from the Fed shows how depended global stocks are on low interest rates and easy money. The US Fed is likely concerned about any fallout from the crisis that has developed in Russia. So for the time being the party continues for equity investors.
Over the next couple of weeks trading volumes will be lower because of the holiday season. So we will see if Gold can rally and have a yearly close above $1200. $1180 is an important support level should any weakness come into the market.
Switzerland Imposes Negative Interest Rate
One of the more interesting stories this week came out of Switzerland, where the Swiss Central Bank imposed negative interest rates. According to a story on Yahoo Finance, SNB President Thomas Jordan told a news conference in Zurich. "The worsening of the crisis in Russia was a major contributory factor in this development.” (Source: Yahoo Finance 12/19/2014)
Switzerland is concerned about capital leaving Russia and moving into the Franc. The proactive move by the SNB is an example of how aggressive the Central Bank will be in defending the 1.20 Euro/Franc cap.
This story is going to be a predominate theme going into next year. Should volatility in asset prices continue, which is likely, then expect Central Banks to take dramatic steps to defend their currencies. The volatility has yet to hit a major currency like the Euro or Dollar. If it does, Gold will be the best protection.
For this weeks update the featured article that we would like to share comes from the folks at Casey Research. There has been a lot of negativity about Gold in the mainstream media recently. The article below is a very good overview of some of the things that are happening in the Gold market that point to higher prices.
The article is titled “7 questions Gold bears must answer”. The link is below.
Casey Research Article: 7 Questions Gold Bears must answer
Market Update for Silver
The recent moves in Silver have been much more volatile than that of Gold, which is to be expected, as Silver is a smaller market. The key for Silver is to see if it can manage a strong close going into year end. The recent high of about $17 is the next key area of resistance.
Even though trading volumes will be light over the next two weeks because of the holiday season. It is possible that more big moves could take place in both Gold and Silver because of portfolio re-balancing at year end. So we’ll see if the metals can manage to stage a late year rally.
Most of our analysis of Silver comes as a result of its properties as a monetary metal. Below is an article that highlights some of the growth areas of Silver. What’s incredible about Silver is the diversity of its application.
Even if there is a significant economic downturn in the world, some of the uses in Silver look to be leading edge. The metal will play a part in the role out of new technologies that will be a key part of the future.
Below is the link.
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