Reply #69: Gold Falls as Declining Energy Costs Ease Inflation Concerns

[54anickel]

http://www.bloomberg.com/apps/news?pid=20601012&sid=a69_h0wCVABU&refer=commodities

Aug. 29 (Bloomberg) -- Gold in New York fell to a one-month low as declining energy costs reduce the appeal of the metal as a hedge against inflation.

Gold and oil have generally moved in lockstep this year. Crude oil traded at a one-week low as Tropical Storm Ernesto veered away from oil platforms in the U.S. Gulf region, reducing concerns over supply disruptions. Before today, gold had climbed 20 percent this year, mostly moving in tandem with oil's 16 percent gain.

``If you're buying gold along with crude for the inflation, you're going to be disappointed,'' said Frank Lesh, a trader at FuturePath Trading LLC in Chicago.

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``Commodity prices are plunging, not rising, and the bond market would have us believe that inflationary pressures are waning, not waxing,'' said Dennis Gartman, gold trader, economist and editor of the Suffolk, Virginia-based Gartman Letter.

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Gold may fall should central banks in Europe sell the metal before a Sept. 26 deadline. Under an accord known as the Washington Agreement, European central banks agreed to limit sales to 500 tons a year. They haven't reached the target yet.

more....


OK, so energy - which the Fed excludes from their inflation data - drops. Somehow that means that inflation expectations - which doesn't take energy into consideration - drops. Yet the mantra through this mal-administration has been how strong and resilient the economy has been and inflation has been tame because energy prices have not been feeding through the economy. So which is it really? I'm soooo confused. Oh yeah, I forgot I need the attention span of a gnat for any of this shit to make sense. :eyes: