Best of the Week
Most Popular
1. Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - P_Radomski_CFA
2.Fed Balance Sheet QE4EVER - Stock Market Trend Forecast Analysis - Nadeem_Walayat
3.UK House Prices, Immigration, and Population Growth Mega Trend Forecast - Part1 - Nadeem_Walayat
4.Gold and Silver Precious Metals Pot Pourri - Rambus_Chartology
5.The Exponential Stocks Bull Market - Nadeem_Walayat
6.Yield Curve Inversion and the Stock Market 2019 - Nadeem_Walayat
7.America's 30 Blocks of Holes - James_Quinn
8.US Presidential Cycle and Stock Market Trend 2019 - Nadeem_Walayat
9.Dear Stocks Bull Market: Happy 10 Year Anniversary! - Troy_Bombardia
10.Britain's Demographic Time Bomb Has Gone Off! - Nadeem_Walayat
Last 7 days
The Deep State vs Donald Trump - US vs Them Part 2 - 21st May 19
Deep State & Financial Powers Worry about Alternative Currencies - 21st May 19
Gold’s Exciting Boredom - 21st May 19
Trade War Fears Again, Will Stocks Resume the Downtrend? - 21st May 19
Buffett Mistake Costs Him $4.3 Billion This Year—Here’s What Every Investor Can Learn from It - 21st May 19
Dow Stock Market Trend Forecast 2019 May Update - Video - 20th May 19
A Brief History of Financial Entropy - 20th May 19
Gold, MMT, Fiat Money Inflation In France - 20th May 19
WAR - Us versus Them Narrative - 20th May 19
US - Iran War Safe-haven Reasons to Own Gold - 20th May 19
How long does Google have to reference a website? - 20th May 19
Tory Leadership Contest - Will Michael Gove Stab Boris Johnson in the Back Again? - 19th May 19
Stock Market Counter-trend Rally - 19th May 19
Will Stock Market “Sell in May, Go Away” Lead to a Correction… or a Crash? - 19th May 19
US vs. Global Stocks Sector Rotation – What Next? Part 1 - 19th May 19
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19
It’s Not Technology but the Fed That Is Taking Away Jobs - 16th May 19
Learn to Protect your Forex Trading Capital - 16th May 19
Gold Ratio Charts Offer The Keys to the Bull Market - 16th May 19
Is Someone Secretly Smashing the Stock Market at Night? - 16th May 19
Crude Oil Price Fails At Critical Fibonacci Level - 15th May 19
Strong Stock Market Rally Expected - 15th May 19
US China Trade Impasse Threatens US Lithium, Rare Earth Imports - 15th May 19
Gold Mind Reader's Guide to the Global Markets Galaxy: 'Surreal' - 15th May 19
Trade Wars and Other Black Swan Threats to Your Investments - 15th May 19
Our Long-Anticipated Gold Momentum Rally Begins - 15th May 19
Defense Spending Is Recession Proof - Defense Dividend Stocks - 15th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

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


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

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 , 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 - 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