Best of the Week
Most Popular
1.Stock Market Crash and Recession Indicator Warning: Extreme Danger Ahead - Harry_Dent
2. Is This How World War III Begins, In Almost Complete Silence? - Jeff_Berwick
3.Trump Wins 2nd Presidential Debate, Betfair Betting Markets Odds Bounce - Nadeem_Walayat
4.Why Krugman, Roubini, Rogoff And Buffett Dislike Gold - GoldCore
5.End of SPX Stock Market Correction Nears - Tony_Caldaro
6.Get Ready for the Future - Exponential Machine Intelligence Mega-trend towards Singularity - Nadeem_Walayat
7.US Housing Market Bubble II – It’s Happening Again! - Andy_Sutton
8.FTSE BrExit Stock Market Panic Crash Resolves towards New All Time Highs - Nadeem_Walayat
9.Can Trump Still Win Despite Opinion Polls, Bookmakers and Pundits all Saying Hillary has Won? - Nadeem_Walayat
10.Gold’s, Miners’ Stops Run - Zeal_LLC
Last 7 days
The Stock Market is an Accident Waiting to Happen - 20th Oct 16
It's Rally Time for Gold and Silver Equities - 20th Oct 16
Cashless Society – Risks Posed By The War On Cash - 20th Oct 16
China's Insanely Leveraged Housing Market Will Enter Its Secular Bull Market In 2017 - 20th Oct 16
Donald Trump Bounces Going into 3rd and Final US Presidential Election Debate - 20th Oct 16
Attention Please: Phase Two of the Gold and Silver Train Now leaving the Station. All Aboard? - 19th Oct 16
How to Successfully Trade a Stock Market Crash - Black Monday October 19th 1987 - 19th Oct 16
Tesla, Apple and Uber Push Lithium Prices Even Higher - 18th Oct 16
Silver, Debt, and Deficits – From an Election Year Perspective - 18th Oct 16
UK Property Market: Slow Growth Does Not Equate To Decline - 18th Oct 16
Trump Election Victory is in Your Power - 18th Oct 16
Stock Market More to Come! - 18th Oct 16
This Past Week in Gold and Silver - 17th Oct 16
A Falling Stock Market Cannot Be Allowed - Financial Repression Is Now “In-Play”! - 17th Oct 16
Commodities, Forex and Stock Market Trend Forecasts - 17th Oct 16
Stock Market Crash..or No Crash? - 17th Oct 16
A perspective on risk rally – Risks abound but Stock Market is Confident - 17th Oct 16
Bank of England Blames Brexit for Sterling Drop Inflation, Masks QE Money Printing Cause - 17th Oct 16
From Piety to Pride to Pity, America's Racial Divide - 17th Oct 16
Is Obama Juicing US Government Spending To Get Hillary Clinton Elected? - 16th Oct 16
Seek Your Independence: Anything Else Will Destroy You - 16th Oct 16
SNL - US Presidential Debates, 1st, 2nd, VP - Like You've Never Seen them Before! - 16th Oct 16
End of Economic Growth Sparks Wide Discontent - 16th Oct 16
Donald Trump on Life Support, May Abandon Election Campaign and War on Republican Party - 15th Oct 16
The Gold Manipulators Not Only Will Be Punished, They Have Been Punished - 15th Oct 16
Black Votes Matter - Is the US on the Verge of Mass Race Riots? - 15th Oct 16
Gold Stocks Screaming Buy - 14th Oct 16
Brace Yourself for the Quadrillion-Dollar Reckoning - 14th Oct 16
The Next Recession Will Blow Out the Budget - 14th Oct 16
John Mauldin: My Infrastructure Plan to Save the US Economy - 14th Oct 16
World War III On The Brink: War Will Continue Until It Triggers Economic Collapse - 14th Oct 16
US T-Bill Rejection At Ports In Progress - 14th Oct 16
These 2 Debt Instruments Pose Peril to Millions of Investors - 14th Oct 16
China’s Rocketing Housing Market Real Estate Bubble - 14th Oct 16
DIY Winter Home Maintenance Money Saving 22 Point Checklist to Get Ready for Winter/Fall - 14th Oct 16
US Stock Market, Big Picture View - 13th Oct 16
Stock Buybacks Main Force Driving Bull Market; Rewards Investors and Starves Innovation - 13th Oct 16
SPX Gapping Down... - 13th Oct 16
Syria - Obama Stepped Back From Brink, Will Hillary? - 13th Oct 16
The Structure and Future of Gold in the Investment and Monetary World - 13th Oct 16
Can Trump Still Win Despite Opinion Polls, Bookmakers and Pundits all Saying Hillary has Won? - 12th Oct 16
Gold and Crude Oil - General Stock Market Links - 12th Oct 16
Samsung's Galaxy Battery Just The Tip Of The Iceberg - 12th Oct 16
Hillary: Deceit, Debt, Delusions (Part Two) - 12th Oct 16
Gold and Silver Metals Show Strength Relative to the USD Index - 12th Oct 16
Announcing Trader Education Week -- a Free Event to Help You Learn to Spot Trading Opportunities - 12th Oct 16
Confirmed Stock Market Sell Signals - 11th Oct 16
Hillary Deceit, Debt, Delusions - 11th Oct 16
Trump Support Crashes to New Low of 6.4 on Betfair Odds Betting Market - 11th Oct 16
The World Is Turning Dangerously Insular - 11th Oct 16
An American Tragedy: Trump Won Big - 11th Oct 16

Free Instant Analysis

Free Instant Technical Analysis

Market Oracle FREE Newsletter

LEARN to Trade

Gold at $2400 as US Monetary Policy Designed to Weaken the Dollar

Commodities / Gold and Silver 2013 Dec 12, 2012 - 08:12 AM GMT

By: Ben_Traynor


THE SPOT gold price climbed back above $1715 an ounce Wednesday morning, around ten Dollars up from last week's close, as stocks, commodities and the Euro also edged higher and US Treasuries dipped, ahead of today's Federal Reserve policy announcement.

Silver meantime edged above $33.20 an ounce this morning, a slight gain on where it started the week.

Several analysts have predicted the Fed will today announce open-ended Treasury bond purchases worth $45 billion a month. In September the Fed announced it will buy $40 billion of mortgage-backed securities a month, while its maturity extension program Operation Twist, through which it sells shorter-dated bonds to buy longer-dated ones, ends this month.

"We have a six-month [gold price] target of $2000 an ounce, but see scope as well for prices to rise to $2400 an ounce by the end of 2014," says the 2013 outlook from Bank of America Merrill Lynch metals strategists this morning, in contrast with the Goldman Sachs gold forecast for 2014 made last week.

"These targets reflect our view that the Fed will maintain mortgage purchases until the end of 2014 and will move to buy Treasuries following the end of Operation Twist in December 2012."

"Quite clearly the US wants a lower Dollar and its monetary policy is certainly geared to deliver it," says currency strategist Steve Barrow at Standard Bank in a note this morning.

"If policy is geared to weaken the Dollar even more, through further monetary easing today, it won't stop any short-term safe haven demand for the Dollar that might arise out of fiscal cliff, but it could impair the ability of the Dollar to continue any such strength into the longer term."

President Obama and House of Representatives speaker John Boehner exchanged new proposals on how to reduce the US deficit yesterday, press reports says, as part of ongoing negotiations aimed at avoiding the so-called fiscal cliff of tax rises and spending cuts currently due at the end of the month unless Congress passes legislation to prevent them.

Obama has reduced his request for additional tax revenue over the next decade from $1.6 trillion to $1.4 trillion, Associated Press reports, but has not changed his call for top income tax rates to be raised.

"I'm pretty confident that Republicans would not hold middle-class taxes hostage to trying to protect tax cuts for high-income individuals," Obama told ABC News Tuesday.

The two sides are yet to reach an agreement.

In Toronto meantime Bank of Canada governor Mark Carney, who takes over at the Bank of England next year, suggested Tuesday that central banks might consider adopting nominal gross domestic product targets as an alternative to inflation targeting.

Under NGDP targeting, a central bank would aim to promote economic growth by targeting a given level of economic output in a given year.

"Adopting a nominal GDP-level target could in many respects be more powerful than employing thresholds under flexible inflation targeting," Carney said.

"This is because doing so would add 'history dependence' to monetary policy. Under NGDP targeting, bygones are not bygones and the central bank is compelled to make up for past misses on the path of nominal GDP."

Greece concluded its debt buyback program Tuesday, with unnamed official sources reporting it has received bids to sell bonds with €31.8 billion face value – above the €30 billion needed to secure Greece's next tranche of bailout funding.

The average price paid for the bonds was however slightly above that targeted, meaning Greece's debt to GDP ratio was reduced by 9.5 percentage points rather than the 11 targeted, according to the source.

The Euro extended yesterday's gains against the Dollar Wednesday, climbing back above $1.30.
China, the world's biggest gold producer and the second-biggest source of private demand last year, produced 34.6 tonnes of gold in October, China's Ministry of Industry and Technology said today.

October's production brings the total for the first 10 months of 2012 to 322.8 tonnes, an 11% increase on the same period last year.

Over in India, which imports most of its gold and is traditionally the world's number one source of demand, efforts should be made to reduce imports of gold and so lower the current account deficit that has risen to record levels, the All India Gems & Jewellery Trade Federation said Wednesday.

Lending 10% of the gold held with temples and householders to jewelers would provide three years' worth of supply, according to federation chairman Bachhraj Bamalwa.

"The only way India can reduce its dependence on imports is to tap the gold lying with individuals and temples," agrees Kishore Narne, head of commodity and currency at Mumbai broker Motilal Oswal.

"By doing this, the country can reduce influx of gold at these high prices. Appetite for gold is never going to diminish."

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 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.

Ben Traynor Archive

© 2005-2016 - 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

Catching a Falling Financial Knife