Daily Gold & Silver Market Report – 5/7/2015

Marcey Hollon

5/7/2015 12:52:00 PM

GOLD SLIPS ON DOLLAR, BOND YIELDS; FED WARY OF BOND CLIFF

Gold is held down for a second day on uncertainty of a U.S. Federal Reserve interest rate hike as well as a steadier dollar, holding below the key level of $1,200 per ounce for a fifth day. “Higher real yields rising are the more dominant factor of Gold weakness at the moment,” ABN Amro analyst Georgette Boele said. Gold has been range bound since mid-February, trading in a range of $80 per ounce versus $150 in January. Bond yields for the U.S. and Europe have risen on easing deflation fears due to an expected interest rate hike and recovering oil prices. Rising bond returns may be viewed as a negative for the Precious Metal.

The Fed is making preventive plans to stave off a disruption of the economy when some $500 billion in bonds are set to expire. The Fed continues to buy up mortgage and Treasury bonds to replenish its $4.5 trillion portfolio and says it will continue to invest after raising interest rates. “My view is this would happen organically,” San Francisco Fed President John Williams said Friday, adding the Fed should give investors time to get used to rate increases before allowing the balance sheet to shrink. “You want enough separation in time just so that, once we get the (rate) normalization process going ... then this would be a decision that would be of second-order.” The Fed believes it will take until 2020 to shrink its portfolio to a normal size.

 

At 1:51 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,185.80. Down $17.80
• Silver, $16.41 Down $0.18
• Platinum, $1,138.80 Down $12.00
• Palladium, $781.30 Down $13.30

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