The Daily Market Report: Gold Consolidates on Mixed Data

16-Jan (USAGOLD) — Gold remains narrowly confined, trading well within the confines of the range established earlier in the week. There was nothing exciting in the U.S. data this morning to move the yellow metal out of the recent trading band.

Initial jobless claims dipped slightly last week, leaving claims just below the four-week average. CPI met expectations for December at +0.3%, edging the y/y pace up to 1.5%, versus 1.2% in November. The NAHB housing market index fell to 56 in January, on expectations of 58. While the Philly Fed index beat expectations, some of the internals were pretty weak.

Ben Bernanke answered questions from the press at a Brookings Institute event. In reviewing Fed action during the financial crisis, Bernanke said “we did the right thing, I hope.” I suppose that does remain to be seen, and Bernanke acknowledged that we won’t know the long-term implications on the economy for some time.

Interestingly Bernanke did dodge a question about whether the present low interest rate environment is a permanent condition. That certainly has proven to be the case for Japan. Yet after a major expansion of qualitative and quantitative easing as part of Abenomics, the IMF’s Christine Lagarde warned yesterday that Japan still needs to do more to “overcome the ogre of deflation.”

In an interview with Bloomberg yesterday, ECB executive board member Benoît Cœuré said, “There is room to cut [rates] if needed, which is consistent with our forward guidance…” Cœuré also said the central bank would be willing to further strengthen that guidance if necessary. Clearly the ECB remains quite dovish.

Make no mistake, despite the recent Fed taper, the age of supra-easy monetary policy is not over yet. Probably not by a long-shot. And that bodes well for gold over the long-run.

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