Gold, Silver and Other PMs: A Whiff Of Reflation?

» Normxxx - A Whiff Of Reflation?

27 June 2005

<img Align="Left" hspace="10" vspace="5" src="http://www.bankcreditanalyst.com/public/...">Gold prices are rising strongly in all major currencies, suggesting expectations of reflationary policies in the months ahead.

The price of gold in U.S. dollars is up about 6% in the past month, despite a stronger U.S. dollar and ongoing Fed tightening. The rally is more pronounced in euros or yen, where prices are at new multi-year highs. Gold got a boost this week following the Swedish Riksbank rate cut and fresh signs that the ECB and BoE may be cutting rates later this year (we expect both to do so). The prospect that the Fed is reaching the end of its tightening cycle is also mildly bullish for gold. Bottom line: further signs of reflationary policy support from global central banks could send gold prices higher in the near term.

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The content of this message is not to be construed as constituting market or investment advice. It is intended for educational purposes only. Individuals should consult with their own advisors for specific investment advice.

-- posted by Normxxx