Expect More Of The Same From FOMC: George Gero, RBC Capital

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Kitco welcomes RBC’s George Gero to discuss the impact the ECB and FOMC meetings have had on the markets alongside any potential impact Friday’s nonfarm payrolls report may have. Gero claims the Fed is in favor of maintaining low interest rates to boost the economy and predicts rates to remain that way for at least the next year. The Fed has a 2% expected target inflation rate although it is currently sitting at 1%. The ECB’s rate cut weakened the Euro to some extent but still managed to benefit the gold market. Gero claims there is a global agreement to maintain these low rates to improve the economies in at least three continents. Comex Gold is suffering because interest in gold shifted as wealth managers began reallocating assets to the stock market. In fact, 12-month data shows a 12% drop in gold, a contrast to a 12-14% increase in stocks during the same period. Gero highlights that ECB president Mario Draghi proved that the market reacted too seriously to German Chancellor Merkel’s bearish gold predictions last week. Gero’s overview of the market is optimistic as he looks at June gold contracts and put options. Lastly, he forecasts high volatility in the markets should Friday’s employment report have any surprises. Kitco News, May 2, 2013.

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