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USAGOLD/Peter Grant/04-21-17
Gold has rebounded intraday to approach the 5½-month highs set early in the week. Silver on the other hand remains defensive below $18, pushing the gold/silver ratio to a 14-week high approaching 72.
Gold is being underpinned by persistent geopolitical risks and uncertainties associated with the French election this weekend. Silver may be suffering from renewed worries over disinflation as oil gives back most of the gains accrued over the over the previous 3-weeks.
Crude has plunged more than 7% this week after gains earlier in the month stalled ahead of the important $55 level. Rising U.S. production and concerns that the OPEC production cut agreement — and perhaps OPEC itself — will fall apart, have all weighed on oil.
A sustained drop in energy prices will further temper inflation expectations, that are already on the ropes in the wake of the weak CPI data that were reported last week. The dimming of price risks has tempered rate hike expectations, driving U.S. yields lower and contributing to a weaker dollar over the past two weeks.
Fed Vice Chair Fischer told CNBC today that he still sees three rate hikes this year, but added “we’re not tied to three.” He expressed concern — as Janet Yellen has recently — about the slowing economy. The Atlanta Fed’s GDPNow forecast for Q1 is a scant +0.5%.
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