Gold and silver futures inched up a fraction of a percent on Wednesday with gold said to be “getting some bids after the disappointing home-sales data,” which showed that new home sales dropped 14.5% from February to March, hitting their lowest level since last July. “The sector’s weakness could help convince the Federal Reserve to keep benchmark interest rates near zero long after it ends a bond-buying stimulus program later this year,” reports Reuters. Also, a ratcheting up of tension over Ukraine was seen supporting gold.
But, lamenting that gold and silver “continued to be capped just below 1300 and 20 respectively” on Wednesday, a post at Jesse’s Café Américain notes that “Someone asked me today how it was that the prices could be ‘capped’ so effectively given the continuing pressure on physical supply by buyers from Asia.” Explaining that “The paper markets are where the price is set, and they have only tenuous connections to fundamentals like supply and demand for real products,” he predicts that eventually “the paper and physical will have to reacquaint themselves and converge, and I suspect that will be a notable reunion indeed.”
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