Gold finishes day in minor uptrend on tepid GDP, possibility of a two front trade war


Gold, pushed by a tepid GDP report, finished the day in a minor uptrend at $1324.50 and up $6 on the day.  Silver lost 5¢ despite gold’s positive showing and finished the day at $16.55.   As the day moved along, gold also got a bit of help from German chancellor Angela Merkel’s frosty reception at the White House.  She had no sooner climbed back into her limo that talk of a trade war between the United States and Europe popped up in financial media.

It seems the Trump administration is intent on opening a two-front trade war with simultaneous Pacific and Atlantic theaters. It is hard to imagine how such a process could unfold without ramped-up demand for physical metals by Asians, Europeans and Americans alike.

A word on next week’s FOMC meeting . . . .

The Federal Reserve’s Open Market Committee will meet Wednesday, May 2, and announce their decision on interest rates at 2pm EDT. Though Fed meetings in recent months have been kryptonite to the gold market this one might not be all that damaging.  First, the Fed is not expected to announce a rate increase.  It is saving that for June.  Second, there will be no analysis, unexpected guidance or forecasting in its statement, at least there is not supposed to be.  Third, there will be no press conference in which the words of the Chairman can be misconstrued, over-analyzed, parsed, re-defined or otherwise bent to the purposes of those rendering an opinion. Gold just might, as a result, escape unscathed.

Quote of the Day
“Gold is a special kind of currency (it is a bet against the U.S. dollar). This is what we have been repeating for a long time (for example, you can check out the July 2015 edition of the Market Overview), but that simple message has not yet reached all investors. So they commit the same mistakes all the time. They focus on irrelevant factors, such as mining dynamics. Or they listen to Warrant Buffet and don’t own any gold. He has the right: gold is neither an industrial commodity, nor an asset generating cash flows. But so what? It’s like complaining to the lion that it’s not an elephant or a giraffe! So please remember one of the most important lessons about the yellow metal’s fundamentals: gold is more currency than commodity.” – Arkadiusz Sieron

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