Each weekday, Cash4Gold will troll through the web's gold banter and post some of the bigger or more interesting stories. Following is a run-down of today's features:
"Gold, Silver Decline as Equity Rebound Curbs Demand for Metals"
Author: Halia Pavliva
Main Points: After a strong start, gold for June delivery dropped $4.80 to end the day at $882.70 an ounce. The shift occurred when Treasury Secretary Timothy Geithner announced that the majority of US banks have more capital than they need.
Analysis: This goes to show just how jittery investors are right now. After several optimistic outlooks from key financial institutions, one partially flawed report from Bank of America caused an immediate panic. Stocks dropped and investors flocked to gold as a safe haven. A few optimistic words from Timothy Geithner today quickly reversed the trend and all is again well. For now.
"Gold Prices Continue to Climb"
Author: Alix Steel
Main Points: As of 11:07 am EDT, the price of gold was up $7.20 to $894.20, continuing an upsurge since the release yesterday of Bank of America's weak first quarter financials (of course, the price of gold inevitably dropped, as explained above).
"Going forward you probably aren't going to see many companies fair as well as they did last year. We are going to see weak economic data over the next several months [and] unemployment is expected to rise. You will see investors move to safe haven assets", says Carlos Sanchez, associate director of research for CPM Group.
That said, Sanchez also believes that scrap selling and price manipulation could keep the price below $900. Although the first quarter GDP number and Fed's market commentary, expected out next week, could potentially bump the price of gold up to $920, the increase would be temporary. The price we've seen below $900 has kept trading strong, but I higher price will dry up demand.
Analysis: Part of the reason two stories are featured with completely different outlooks on the same day is to show just how erratic things are right now. Things were looking gloom for the market and positive for gold. Quite quickly, that all changed.
Conservative short-term projections like this one appear on the surface to be much more realistic than some of the more aggressive $1,000 - $1,500 prognostications. As Mr. Sanchez and several other experts have pointed out, despite the seemingly ripe opportunity for a high gold price, there are simply far too many forces in this environment keeping it down.