Greece Elections a Yawn, Now Watch the FED, FOMC and G20 – Peter Hug of Kitco Metals

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With the uneventful elections in Greece now over, the FED/ FOMC meetings are being anxiously anticipated by the markets. Will the meeting minutes bring easing? We cover both in this week’s “For Pete’s Sake” with Peter Hug, Precious Metals Director at Kitco Metals. Starting with the market’s reaction Greece, Hug explains that the reason for it turning into a nonevent is because the much larger economies of Spain and Italy still have uncertainty in their futures and are therefore being watched by the markets closely, making Greece just a side issue despite the short-lived uptick caused by the initial news of a possible pro-coalition government in Greece. What markets will really be paying attention to, however, are the FED meeting and G20 Summit. Fed meeting is key, since markets are desperately expecting a continuation of Operation Twist, and perhaps even more quantitative easing. Hug emphasizes that this will be the last chance the FED has to take any meaningful action before the election, but notes that QE3 seems unlikely. He predicts an initially negative reaction to FED news by the metals/commodities complex, at which point everyone will turn their attention to the G20 Summit on Thursday. As far as the G20 is concerned, Hug doesn’t expect any substantial news from there either, given the arguments still ensuing between Germany and the rest of the European Union, which are unlikely to be resolved or given much verbiage at the G20.

Overall, Hug say that as a trader he would not be short given the current markets, but that we should have a better handle on the near-term direction and outlook by Thursday. He expects gold to stay within the $1,580-$1,650 range, with probably more pressue to the upside ahead of the FED and G20 announcements coming on Wednesday and Thursday. Kitco News, June 18, 2012.

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