Gold price is flashing a 'very good sign' - Peter Hug
(Kitco News) - It's a "very good sign" that gold has consolidated between a support level of $1,925 oz and $1,975 an ounce for the better part of two weeks, said Peter Hug, head of Kitco’s precious metal division.
"The fact that people are not selling into a market that isn't as frenetic as it was a month or six weeks ago indicates to me that this market is setting up for the next leg higher," Hug told Kitco News on Wednesday.
Yesterday, the Federal Reserve announced they were keeping interest rates at current levels through 2023 as they look for economic growth to pick up. The Fed Chairman Jerome Powell gave a press conference regarding the central bank's decision.
Hug said Fed officials seemed nervous about the economic recovery "...and the legs this economy is going to have".
"[About] three Fed meetings ago they indicated they would hold rates at pretty much zero through the end of 2021. They've extended that by an additional year. Some analysts are expecting that they will keep rates at zero right through 2024."
Hug said that with the Fed "...being a bit more accommodative on inflation indicates to me, it's a very positive environment for hard assets in general."
Regarding physical supply of precious metals, Hug noted that the stability has led to more inventory.
"I see this market as running sideways as long as we don't get another rush into the buying side from the retail investor. In another two- to four-weeks, there'll be reasonable inventories on the market," said Hug.