The FOMC meets at the end of the month and a rate cut is a near certainty. Officials may even drop the Fed funds rate by 50 basis points, which would be double the size of the moves seen in recent years.
Silver finally played some catch up to gold. It gained a whopping $1 for the week, despite losing some ground on Friday. The gold/silver ratio dropped from almost 93 to about 87.6. Metals investors were encouraged to see silver confirm gold’s recent move higher.
One possible fly in the ointment for gold bugs is the growing open interest in the futures markets. The bullion banks are taking the short side of the bet from speculative longs looking to trade.
Big institutions that hold outsized positions aren’t in the habit of losing money. Absent an overwhelming influx of specs, prices are likely to correct at some point. However, both gold and silver markets now have strong support undergirding current price levels.
The roster of economic data scheduled for this week includes reports on real estate, durable goods, and GDP. The GDP data due Friday will be the first look at the second quarter. And like most recent reports, it is expected to show some growth but not what could be deemed as real strength.
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