Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Up as Fed Will Push QE3 if Necessary

Commodities / Gold and Silver 2011 Aug 10, 2011 - 11:57 AM GMT

By: Ben_Traynor


Best Financial Markets Analysis ArticleTHE DOLLAR gold price rallied to $1767 an ounce Wednesday morning in London – 0.6% off the previous day's all-time high – as stocks and commodities also rose following the US Federal Reserve's interest rate announcement on Tuesday.

Silver prices climbed to $38.67 an ounce – 0.9% up for the week so far.

"We believe the gold price will lose some of its recent strong upside momentum in the course of the coming days," says Axel Rudolph, technical analyst at Commerzbank.

"Nonetheless [we] maintain our medium term bullish outlook."

The gold price "should remain supported," adds David Thurtell, analyst at Citigroup.

"I think there are enough concerns about sovereign debts and weakening growth, that people will buy dips."

The US Federal Reserve confirmed Tuesday that it will keep its benchmark interest rate at historic lows between 0 and 0.25%, to "promote the ongoing economic recovery".

"The Committee currently anticipates that economic conditions – including low rates of resource utilization and a subdued outlook for inflation over the medium run – are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013," said a statement from the Federal Open Market Committee.

The FOMC said it also discussed its "range of policy tools" – and is "prepared to employ these tools as appropriate".

"Bernanke will push through QE3 if the economic conditions warrant it," explains Steve Lear, deputy chief investment officer at JP Morgan Asset Management, referring to a possible third round of quantitative easing.

"We now see a greater-than-even chance that the FOMC will resume quantitative easing later this year or in early 2012," agrees Jan Hatzius, chief economist at Goldman Sachs.

Here in Europe, there remains a "massive overvaluation" of the Swiss Franc, according to a statement issued Wednesday by the country's central bank.

"The Swiss National taking additional measures against the strength of the Swiss Franc," the SNB said.

"It will again significantly increase the supply of liquidity to the Swiss Franc money market."

The SNB says its aim is to boost by 50% the sight deposits – meaning deposits available for immediate withdrawal – that commercial banks hold with the central bank.

"With liquidity already ample in Switzerland [however], the Swiss authorities could be doing little morning than pushing on a string," reckons Jane Foley, senior currency strategist at Rabobank International.

The SNB last week cut its benchmark interest rate to "as close to zero as possible".

The Swiss Franc has risen 29% against the US Dollar since the start of the year. The Swiss Franc gold price was down around 3% for the year on Wednesday morning, while the Dollar gold price was up around 25%.

Here in the UK, the Bank of England cut its growth forecast for 2012 to 2% – down from 2.5% – adding it expects growth "to remain sluggish in the near term, reflecting the continuing squeeze on households' real incomes".

"The most likely outcome is for inflation to be a little below target in the medium term," it said in Wednesday's quarterly Inflation Report, although it added there is a "good chance" consumer price inflation will hit 5% by the end of this year.

The Bank – which has held its benchmark interest rate at 0.5% since March 2009 – has an official CPI inflation target of 2%.

Meantime in India – the world's largest gold bullion market – demand for gold was "slightly slow" on Wednesday, according to one jeweler in the southern city of Chennai.

Princeson Jose, managing director of Prince Jewellery, says people are waiting for the gold price "to stabilize".

"The spike in prices has made customers a little cagey, adds Bhadresh Shah, a bullion analyst in Mumbai.

The long term sentiment among traders remains bullish, however, Wednesday's Wall Street Journal reports.

In Dubai, by contrast, gold souqs report they are running out of gold bars and coins. Those dealers who still have gold have increased the premium they charge above the spot gold price by up to 650%, according to press reports.

By Ben Traynor

Gold price chart, no delay   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in