Gold and Silver Up Big as Draghi Promises More

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Gold and silver up more than 2.5 percent on Friday.

Christopher-LemieuxSMBullion.Directory precious metals analysis 5 December, 2015
By Christopher Lemieux
Senior Analyst at Bullion.Directory; Twitter @Lemieux_26

With price action for gold and silver looking ugly, gold traders can always count on central bankers for boosting the price of this ultimate central bank hedge.

Precious metals were able to gain despite a .45 percent move in the dollar.

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Many believe that gold was on its way to $1,000 per ounce because of the renewed hopes of a increase in the Fed funds rate in December, but could that already be priced in? It’s possible.

Others believe gold soared on the fact that European Central Bank (ECB) President Mario Draghi failed to deliver the increase in stimulus traders were looking for last Thursday, which is counter to the rationale that more stimulus should equal stronger gold prices.

What kept gold strong, surging almost $25 on Friday, was Draghi’s – well, every central banker’s – pledge to do more “if needed.” In fact, he said there would be “no limit” to implementation of what tools central banks deem they have: it’s either interest rates or asset purchases.

Here, we can see Draghi confronted with the question on whether his rhetoric was designed to offset the huge four cent climb in the EURUSD after not increasing QE measures:

 

Silver bucked the dollar trade, too. Jumping over 3.22 percent, silver was able to close above $14.50 per oz., after hitting a post-financial crisis low of $13.80.

The suppression of gold and silver prices are on the predication that globalized QE will be a success.

We’re still waiting….

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