Gold prices continued melting Wednesday after the Federal Open
Market Committee said nothing new in sticking with its easy
Spot gold prices fell 0.35% to $1702.70 an ounce.
PowerShares DB U.S.
Dollar Index Bullish (
), measuring the greenback against a basket of major foreign
currencies, was unchanged at 21.91.
"Any move below $1,700 an ounce for gold will be temporary and
remains an excellent buying opportunity," said Peter Spina,
president of GoldSeek.com. "Physical demand remains very strong
globally, and the gold price correction is a reflection of
profit-taking from funds and investors after nearly a $300 move
over the past months."
He expects gold to rebound as short sellers, who profit from
falling prices, close their positions by buying back their
"There were huge short positions in gold taken on the run-up
to $1,800 and now being unwound," Spina said.
Joe Foster, portfolio manager of Van Eck International
Investors Gold , also thinks the weakness offers a chance to
"Uncertainty around the presidential election, fiscal cliff,
Fed policies, and ongoing sovereign debt problems in Europe
should be supportive of gold," he said.
SPDR Gold Shares (
), tracking a 10th of an ounce of bullion, slipped 0.29% to
164.94 -- a seven-week low. It broke below its 50-day moving
average Tuesday and followed through with more weakness. It has a
mediocre IBD Relative Strength Rating of 49 and C
Accumulation-Distribution Rating, on an A to E scale.
Institutional buying and selling is about even.
Market Vectors Gold Miners ETF (
) dropped 1.63% to 50.13 -- a six-week low. It broke below its
50-day line for the first time since mid-August. The next level
of price support is at the 200-day moving average at 48.63, down
3% from its current price. It has a moderately strong IBD
Relative Strength Rating of 71 and a B- Accumulation-Distribution
Rating. It's outperforming 71% of the market, and institutions
are buying more shares than selling.
Silver Prices Find Support
Spot silver prices ticked up 0.19% to $31.83 an ounce.
IShares Silver Trust (
) rose 0.26% to 30.76. It's Relative Strength Rating of 58 is
slightly stronger than gold. It has middle-of-the-road
Accumulation-Distribution Rating of C, which shows institutional
buying and selling are about even.
Silver Miners ETF (
) fell 0.99% to 23.89. It's still trading above its 50-day
average, which means its uptrend remains intact. It also sports a
strong IBD Relative Strength Rating of 86 and B+ for
Accumulation-Distribution. That means it's outperforming 86% of
the market and institutions are heavily buying more shares than
What's Next For The Fed
The Fed next meets Dec. 11 and 12 -- it's first after the
"If President Obama wins re-election, the Fed is expected to
maintain its current accommodative policy course," IHS Global
Insight U.S. Economist Paul Edelstein wrote. "If Bernanke steps
down as chairman in early 2014, he will likely be replaced by
someone with a similar philosophy about monetary policy."
"If Romney wins, the Fed is still expected to maintain its
current policy stance for the remainder of this year and 2013,"
Edelstein added. "Romney is expected to nominate a more hawkish
Fed chairman for 2014 who could take monetary policy in a less
accommodative direction. If so, markets, after the election,
might begin to find the Fed's intention to keep the fed funds
rate low beyond 2013 less credible."
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