Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Stock Market Deviation from Overall Outlook for 2020 - 22nd Feb 20
The Shanghai Composite and Coronavirus: A Revealing Perspective - 22nd Feb 20
Baltic Dry, Copper, Oil, Tech and China Continue Call for Stock Market Crash Soon - 22nd Feb 20
Gold Warning – This is Not a Buying Opportunity - 22nd Feb 20
Is The Technology Sector FANG Stocks Setting Up For A Market Crash? - 22nd Feb 20
Coronavirus China Infection Statistics Analysis, Probability Forecasts 1/2 Million Infected - 21st Feb 20
Is Crude Oil Firmly on the Upswing Now? - 20th Feb 20
What Can Stop the Stocks Bull – Or At Least, Make It Pause? - 20th Feb 20
Trump and Economic News That Drive Gold, Not Just Coronavirus - 20th Feb 20
Coronavirus COVID19 UK Infection Prevention, Boosting Immune Systems, Birmingham, Sheffield - 20th Feb 20
Silver’s Valuable Insights Into the Upcoming PMs Rally - 20th Feb 20
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Gold Price Ignited by Important Shift in US Fed Policy

Commodities / Gold and Silver 2012 Aug 23, 2012 - 06:42 AM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleWHOLESALE MARKET gold prices ticked lower in London on Thursday from the highest Dollar and Euro levels since end-April after rising again in Asian trade.

Wednesday's minutes from the US Federal Reserve's latest policy meeting "ignited" the gold investment market, according to one trader, with buy-stops triggered at $1650 according to another.


The move took this week's gains in gold to 3.0% at $1667 per ounce – half of which has come thanks to a drop in the Dollar's exchange rate.

Prices to buy silver also rose further overnight, extending this week's rise to 8.9% at $30.60 per ounce – the highest level since early May.

"Platinum [also] continues it's steep ascent and helps to drive the rest of the [precious metals] complex higher," says senior trader Alex Thorndike at MKS in Sydney, pointing to further concerns over industrial unrest in South Africa – source of 75% of the world's annual platinum output.

New manufacturing data from China, however – compiled in the HSBC/Markit Economics PMI indexes – today showed contraction in all areas except the stockpile of finished goods.

The contraction rate in output, new orders and prices accelerated in August, taking the headline PMI down to a 9-month low of 47.8. A reading of 50 would indicate no change.

Thursday saw the People's Bank of China conduct yet another "liquidity injection" into the nation's banking system, bringing the net injection of cash this week to CNY 365 billion ($43bn) – the biggest volume in 7 months according to Reuters and a level not usually seen outside the Chinese New Year holidays.

"We see higher inflation because of rising commodity prices, unconventional monetary policies and increasing sovereign debt," said Nic Johnson, manager of the $20 billion Commodity Real Return Strategy at Pimco, the world's largest bond-investment group, to Bloomberg yesterday.

Raising the fund's gold investment position to 11.5% of its portfolio, "We think gold is going to perform in a positive correlation to changes in inflation," said Johnson.

"The [US] Fed's tone," reckons Chen Min, analyst at Jinrui Futures in Shenzhen, "is totally different in the minutes from previous comments.

"That helped gold break into a higher price range ahead of the peak consumption season" – starting with India's post-harvest wedding and Diwali seasons, and then running into the Chinese New Year.

Yesterday's Fed minutes said "many" members felt fresh quantitative easing would be needed "fairly soon". The option of a "flexible bond buying program" was also discussed, in contrast to the previous QE strategy of buying a pre-announced volume of US Treasury debt.

"A move to an open-ended policy stance would be a important and powerful shift," says Michael Gapen at Barclays in New York.

"It would, in effect, say that the Fed is in motion until the data tell it to stop."

European stock markets meantime ticked higher on Thursday. German and French equities have now recovered three-quarters of last autumn's 30% plunge.

Crude oil rose 1%, while broader commodity markets ticked higher.

Major-economy government bonds also rose yet again, while weaker Eurozone debt fell.

The gap between the rates of interest offered by 10-year Spanish and German debt widened to more than 5 full percentage points.

In Athens on Wednesday, Eurozone finance chief Jean-Claude Juncker said Greece is facing its "last chance" to reduce government spending and so receive fresh bail-out funds from its single-currency partners.

Although "totally opposed" to a Greek exit from the Eurozone, "I personally think ordinary people in Greece have suffered a lot," said Juncker, "and it would not be advisable to put further demands on them."

Greek prime minister Antonis Samaras yesterday vowed a new package of cuts worth €11.5 billion ($14bn) would be announced in September.

Samaras travels to Berlin on Friday, where German chancellor Merkel is today meeting French president Hollande to discuss the two-year crisis.

By Adrian Ash
BullionVault.com

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

Formerly City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at www.BullionVault.com , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2012

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 http://www.MarketOracle.co.uk - 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

6 Critical Money Making Rules