KITCO NEWS -- The gold market was in backwardation this week, and
according to one research director, it was the most prolonged period in
history that it has been in this state. ‘Right now, what’s been
happening [in gold] lately is almost unprecedented,’ Mike McGlone of ETF
Securities told Kitco News Friday, adding that this is a sign that the
market is bottoming out. According to McGlone, backwardation is a sign
of strong physical demand in the market. ‘It’s almost the perfect storm
for gold,’ he said. ‘This whole process is the market bottoming, the
question is how long will it take.’ February comex gold futures were
last quoted up/down $13.1 at $1,056.60 an ounce. Looking ahead to the
imminent rate hikes in December, or so the market seems to think,
McGlone says there is potential of a ‘misfire’ by the Federal Reserve.
Looking at data, particularly declining retail sales figures, he said
the Fed is taking a big risk to raise rates as U.S. economic data
remains mixed. ‘The Fed expects that to shift up, and that’s a
tremendous risk. Last time they tightened, these trends were moving
higher,’ he said. ‘That is very disconcerting.’
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