Gold takes breather, keeps wary eye on same quintet of concerns

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(USAGOLD – 10/3/2019) – Gold is taking a breather this morning after the two-day over $40 reversal begun at $1460. It is trading at $1501 – up $1 on the day.  Silver is down 5¢ at $17.52.  The market is still driven by the same quintet of concerns present since the late May price turnaround:  the U.S.-China trade war, associated recession concerns, global easy money policies, geopolitical instability and depreciating local currencies. As reported here last week, much of last week’s sell-off had to do with technical selling and profit-taking.  The gold market overall seems to be recalibrating – biding its time while keeping a wary eye on the aforementioned concerns.

Quote of the Day
“My time horizon is that I usually measure moves like these in terms of decades,” he said at the time (gold was trading just below $1300 per ounce). “So let’s look at it like this: The first move, the first leg, in gold took it from $250 per ounce to $1900. . .We’ve now been in a correction that has taken gold from $1900 back to where we are today. You could easily see gold fall a couple of hundred dollars before you see it go up a couple of thousand dollars, but each move has been a decade or more which means that when gold embarks upon its next move, I believe that you will see that long wave will take gold relatively quickly to the $3000 to $5000 target that I believe is fundamentally justified based on the facts we have today.” – Thomas Kaplan, Electrum Group Bloomberg interview (Late May 2019, just before gold began its climb from the $1280 level)

Chart of the Day

Chart courtesy of the St. Louis Federal Reserve [FRED]
Source:  Board of Governors Federal Reserve System [US]

Chart note: This chart of U.S. Treasury securities held by the Federal Reserve shows an abrupt reversal of the quantitative tightening program begun in early 2018. Current repo rescue operations, or QE Lite as it has been dubbed, is likely to further boost the Fed’s stockpile of U.S. Treasuries.