Gold Price Finishes Week Nearly Flat

New York (Jum 21)  August gold settles 1201.9, up $22.70 for the week ended June 19th, 2015. After a two percent rally Thursday, gold finished the week nearly flat for Friday’s session, as the market awaits further news on Greece and the effect it may have on global currencies, most notably the dollar. On Wednesday, the Federal Reserve’s caution on the timing of a perceived rate hike in 2015 shook currency markets, sending the dollar sharply lower, while gold rallied. I don’t believe this week’s gold rally of just fewer than two percent can be attributed to speculative buying, but rather short covering, as the market was anticipating more of a hawkish tone from Janet Yellen. Instead, the Fed trotted out more of a dovish tone, cautioning that the committee needs to see continued progress on job creation, GDP, and retail sales before committing to a rate hike. Simply put, inflation is nowhere near the threshold for a more consistent and stringent policy on rate hikes. We continue to watch economic report after economic report and how those releases affect the greenback. I believe going forward that gold will trade in inverse to the dollar.

As of this posting, Greece and its international creditors remain deadlocked over a debt deal. Eurozone leaders will hold an emergency summit on Monday to try to avert a Greek default after bank withdrawals accelerated. Investor positioning remained bearish, with assets of top gold-backed exchange traded fund SPDR (ARCA:SPY) at their lowest since 2008 and speculators increasing short positions. Asian physical demand was also sluggish, as a tight price range and higher stock market yields have kept consumers away. In China, prices on the Shanghai Gold Exchange fell to a discount of up to $2 an ounce to the global price from a premium of between $1 and $2 on Thursday, indicating weak demand.

Source: Investing.com