Gold and Silver Prices Remain Low
As we see a more and more call options on commodities like gold and silver, their prices are still low today. This is largely due to the US Federal Reserve’s reluctance to expand Quantitative Easing (QE3) and instead opting for “Operation Twist”.
While hedge funds and portfolio managers increased their buying on most futures and options by 7%, prices are still down from last week. This is the strongest buying volume in a month.
While most investors were hoping for the Fed to expand their QE3, they will have to setting for Operation Twist. This program seeks to stimulate market growth by $267 billion through the selling of short-term bonds while simultaneously buying long-term bonds to lengthen the average maturity. This will help keep interest rates low.
Goldman Sachs Commodity Index dropped 3.2% last week, and down 21% from a high in February.
Silver had the largest decline, losing 7% since December.
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