traderdannorcini.blogspot.com / Dan Norcini / Friday, June 27, 2014
I have mentioned in the past that I would keep the readers up to date on the TIPS spread action, especially as it compares to the gold price. I have the data through Thursday of this week ( the Federal Reserve is always a day behind in getting the fresh data) but it does continue to confirm the idea that the broader market is still continuing to see inflationary pressures increasing, albeit at a controlled rate. I believe that this is linked directly to the recently dovish attitudes of three Western Central Bank heads – ECB President Trichet, who got the ball rolling with a reduction in rates in the Eurozone as well as engaging in negative rates for bank reserve deposits, Fed Chair Yellen and BOE Head Carney.
The TIPS spread remains near the highest level in 6 months, a positive key that is keeping gold supported recently. We need to also keep in mind that another of the factors that goes into determining the gold price is also a premium due to the geopolitical factors that might or might not be present. At the current time, the chaotic events in Iraq are undergirding the price of the metal. Lurking around also, although much less of a factor, are events in Ukraine.
