Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

QE3 "Could Push Gold Over $1800"

Commodities / Gold and Silver 2012 Sep 13, 2012 - 12:15 PM GMT

By: Ben_Traynor

Commodities

Best Financial Markets Analysis ArticleWHOLESALE MARKET gold prices traded around $1730 an ounce Thursday morning in London, a few Dollars below where they started the week, while stock markets ticked lower ahead of today's policy announcement by the US Federal Reserve.

Silver prices hovered around $33.10 per ounce – 1.8% down on the week – while other commodities were also broadly flat and US Treasuries gained.


A poll by newswire Reuters suggests economists see a 65% chance the Fed will announce a third round of quantitative easing (QE3) later today.

"If we do see a QE3 announcement, gold is likely to race through $1800 an ounce," reckons Chen Min at Jinrui Futures in China.

"But we also need to realize that the marginal effect of quantitative easing will diminish and it will be too optimistic to expect gold to break above $1850 even if QE3 is announced."

"Although [earlier QE] has helped kick-start some growth in the US," adds INTL FCStone analyst Ed Meir, "the fact that we are once again at the 'money trough' is not very reassuring. We will have to see if investors reach the same conclusion in the weeks ahead, particularly if they see no immediate improvement in the macro numbers."

August's official nonfarm payrolls report, published last Friday, showed the US economy added fewer jobs than expected last month, while previous estimates for June and July were revised lower. Dollar gold prices jumped to six-month highs following publication of the report.

"Last week's surge in the gold price has made us change our medium term outlook, with this now being bullish," says Commerzbank senior technical analyst Axel Rudolph.

"People have priced in quantitative easing and the disappointment factor is very high," warns Bayram Dincer at LGT Capital Management in Switzerland.

"If this quantitative easing does not materialize, you'd surely see prices fall."

Some analysts have suggested that rather than announce an asset purchase program of fixed size and duration, as was the case with QE1 and QE2, the Fed may instead opt for an open-ended approach, or could try some other policy.

"A very positive [market] response would probably occur if the Fed tried something else," says today's currencies note from Standard Bank.

"This could be a reduction in the rate on excess reserves to zero, the setting of a yield target, the setting of some other target that governs the longevity of QE, like an inflation and/or unemployment target, and a funding-for-lending scheme similar to the UK...however, we are not sold on the idea that the Fed will go to this next level."

On the currency markets, the US Dollar Index, which measures the Dollar's strength against six other major currencies, remained below 80 this morning, after falling below that level for the first time since May on Tuesday. Sterling and Euro gold prices were down around 1% on the week this morning, with both currencies having gained against the Dollar in recent days.

Over in Europe, Spain's debt-to-GDP ratio could hit 104% by 2016 if the country manages to deliver half of its agreed "structural adjustment" for this financial year, according to the European Central Bank's monthly report published Thursday. A similar scenario for Italy would see the debt-to-GDP ratio hit 125% next year, the report adds.

Elsewhere in Europe, yesterday's Dutch general election saw Mark Rutte returned as prime minister, with his Liberal Party and its main opposition Labor gaining support at the expense of more Eurosceptic parties, the Financial Times reports.

Switzerland's central bank meantime left its minimum exchange rate against the Euro unchanged at SFr1.20 this morning.

"The Swiss National Bank...will continue to enforce [the exchange rate floor] with the utmost determination," said a statement from the SNB.

"It remains committed to buying foreign currency in unlimited quantities for this purpose."

In South Africa, newspapers report striking gold miners marched to hostels and mine shafts at the Gold Fields KDC West mine to prevent non-strikers from working. Around 15000 workers at KDC West began striking on Sunday.

There have been calls for a nationwide mining strike following a series of disturbances of several platinum and gold mining sites, including Lonmin's Marikana platinum mine, where 45 people have died since protests began, including 34 shot dead by police last month.

By Ben Traynor
BullionVault.com

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 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.


© 2005-2022 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