Lower Than Expected Economic Numbers Good For Gold

December 30, 2003
Jim Sinclair

This morning’s lower than expected economic numbers should be seen in the context of what is the main driver behind the gold price at this time. It is not the tradtional Gold Community that has taken gold from below $390 to just a hair under the horizontal resistance at $419.70.
 
Certainly, horizontal resistance should give the price of gold some temporary challenge. However, keep in mind that the driver of the gold price is the major international invesment firms that are operating under the view that as long as the Federal Reserve maintains the discount rate at 1%, the price of gold will go higher.

Softer economic numbers will lead the Federal Reserve to do everything possible to keep the shortest term rates down. So lower economic numbers support a higher price for gold.

A close over $419.70 in cash will take gold to the next mark of $430.30. 

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