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09 October 2011

Gold and Silver Languish as Reasons to be Bullish Build

Gold and Silver prices remain stubbornly sluggish as reasons to buy bullion increase. The fed may hold the keys to the next price moves

Bullion prices have failed to excite over the last fortnight. Following Golds sell off from the mid 1800 dollar level last month, which was accompanied by a similar correction in Silver, the yellow metal has suffered from forced selling by investors battered by losses in other asset classes. Most noticeably equity markets have suffered the worst carnage with fretting over European troubles setting the tone.

For investors heavy on Gold and Silver, this theme sounds depressingly familiar. All the reasons for precious metals to soar seem present but the metal seems resolutely stuck around $1650.

And yet bullish sentiment in precious metals continued to build last week though prices remained flat.'s gold market report on Friday highlighted a new Morgan Stanley report stating "Gold and silver are our top commodity picks heading into 2012". Other bullish noises from analysts also appeared to get noisier.

As the great European slow motion train wreck holds the attention of media and investors alike, it will be Federal Reserve moves that will control the mood of Mr Market next week. Publication of September’s FOMC minutes on Wednesday will indicate if the US Treasury is likely to try further monetary stimulus in the shape of QE3. This would follow the Bank of England’s resumption of QE with it's decision to inject £75 billion this week.

All of this may have encouraged physical retail investors to resume buying. Gold Buying activity at showed further signs of a return to the market by coin and bar buyers as traffic and comparisons rose 15% on the previous week.

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