(Kitco News) – Gold broke a bit lower than my expected range yesterday. I underestimated the nervousness associated with Yellen’s remarks tomorrow. The market is positioned on the long side and lightening up on exposure “in case” Yellen surprises is a normal pattern. The market is also extremely thin, so I suspect the initial drop yesterday morning was a large commercial sale in a thinly bid market. Gold held the $1,322 level and I suspect will trade in the $1,320 – $1,332 range today. Economic data has not shifted sufficiently to propel the Fed to move in September, but language will again be scrutinized to see if the Fed’s guideposts have altered. Should Yellen remain benign and tie rate increases to future economic data, I suspect the metals will rebound from the recent weakness. Should Yellen create a more hawkish tone, given the thin markets, a possible test of the $1,307 level may be in the cards, but we continue to consider any pull-backs as accumulation opportunities. Global central banks will continue to adopt accommodative monetary policy. The U.S. election, which is becoming a global sit-com, will create financial uncertainty and it remains plausible that the Fed may need to become more accommodative in the future, not restrictive, with monetary policy.

What you missed on this week’s For Pete’s Sake show:

By Peter Hug, Kitco Metals Global Trading Director; phug@kitco.com