Best of the Week
Most Popular
1.Crude Oil Price Trend Forecast 2016 Update - Nadeem_Walayat
2.Will Deutsche Bank Crash The Global Stock Market? - Clif_Droke
3.Gold Price In Excess Of $8000 While US Dollar Collapses - Hubert_Moolman
4.BrExit UK Economic Collapse Evaporates, GDP Forecasts for 2016 and 2017 - Nadeem_Walayat
5.Gold Stocks Massive Price Correction - Zeal_LLC
6.Stock Market Predicts Donald Trump Victory - Austin_Galt
7.Next Financial Crisis Will be Far Worse than 2008/09 - Chris_Vermeulen
8.The Gold To Housing Ratio As A Valuation Indicator - Dan_Amerman
9.GDXJ Gold Stocks - A Diamond in the Rough - Rambus_Chartology
10.Gold Boom! End Game Nears As Central Banks Buying Up Gold Mining Companies! - Jeff_Berwick
Last 7 days
BEA Revises Q2 2016 US GDP Growth Upward to 1.42% - 29th Sept 16
Could the OPEC deal set stage for the Next Stock Market Risk Rally? - 29th Sept 16
Why Trump Lost, Hillary Won the 1st U.S. Presidential Debate - 29th Sept 16
Is a Dollar Crash Imminent After the Senate Overrides Obama Veto on Saudi 9/11 Bill? - 29th Sept 16
2017: Gold and Silver's Year of "Public Recognition" - 29th Sept 16
Did Trump Win the 1st US Presidential Election Debate? - There's Something Happening Here... - 29th Sept 16
FED Goes from ZIRP to NIRP! - 29th Sept 16 - Chris_Vermeulen
Here’s Why You Should Be in Cash Right Now - 28th Sept 16
The Fed Put a 50% Tax on Your Retirement Plan - 28th Sept 16
Massive Chinese Debt And Why They Are On A Gold Buying Binge! - 28th Sept 16
Stocks Commodities and FX Markets Waiting Technically While Fundamental Data Neutral Poised - 28th Sept 16
This Commodity Has Perked Up its Investors' Portfolios - 27th Sept 16
Charting the Continuing Gold Market Correction - 27th Sept 16
Stock Market Crash and Recession Indicator Warning: Extreme Danger Ahead - 27th Sept 16
Financial Markets and FX Setups 27th Sept - 27th Sept 16
Crude Oil, Forex and Stock Market Trend Forecasts - 27th Sept 16
Why There is Trump - 27th Sept 16
Save Up to 70% in Shopping Expenses for Daily Items - 27th Sept 16
Gold’s Moving Averages and Long-Term Outlook - 26th Sept 16
September Stock Market - The Not So Silent Demise of Deutsche Bank - 26th Sept 16
SPX sell signal confirmed - 26th Sept 16
SPX is testing the next level of support - 26th Sept 16
Outrageously Entertaining US Presidential Campaign Final Stages - What Happens Next? - 26th Sept 16
BoJ, FOMC and Where To Now? - 26th Sept 16
Stock Market New All Time Highs Next - 26th Sept 16
Why Trump Will Win US General Election 2016 Prediction Forecast - 26th Sept 16
Martial Law Rolls Out Across the US As Jubilee Nears - 26th Sept 16
Stock Market More Correction Likely - 25th Sept 16
US Presidential Election Forecast 2016 - Trump Riding BrExit Wave into the White House - 25th Sept 16
US Economy GDP Growth Estimates in Free-Fall: FRBNY Nowcast 2.26% Q3, 1.22% Q4 - 24th Sept 16
Gold and Gold Stocks Corrective Action Continues Despite Dovish Federal Reserve - 24th Sept 16
Global Bonds: Why Our Analyst Says Things Just Got "Monumental" - 24th Sept 16
Where Did All the Money Go? - 23rd Sept 16
Pension Shortfalls Could Be 4X To 7X Greater Than Reported - 23rd Sept 16
Gold Unleashed by the Fed - 23rd Sept 16
Gold around U.S Presidential Elections - 23rd Sept 16
Here’s Why Eastern Europe Is Doomed - 23rd Sept 16
Nasdaq NDX 100 Big Cap Tech Breakout ? - 23rd Sept 16
The Implications of the Italian Banking Crisis Could Be Disastrous - 22nd Sept 16
TwinLakes Theme Park Summer Super 6 FREE Return Entry for Real? - 21st Sept 16
Has the Silver Bullet Run Out of Fire Power? - 21st Sept 16
Frack Sand: The Unsung Hero Of The OPEC Oil War - 21st Sept 16
What’s Happening With Gold? - 21st Sept 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The Power of the Wave Principle

Gold & Silver Fall Hard from 2-Week High as New Fed Easing Spooks Traders

Commodities / Gold and Silver 2012 Dec 13, 2012 - 09:41 AM GMT

By: Adrian_Ash

Commodities

GOLD and silver fell hard overnight and early Thursday in London, dropping as European stock markets also fell and the US Dollar rose despite yesterday's latest "easy money" policy from the Federal Reserve.

Holding its key interest rate in the record low range of 0% to 0.25% for the 48th month running, the Fed's open market committee swapped its guidance for any rise in interest rates from mid-2015 to a target unemployment rate of 6.5% or below.


The Fed also confirmed it will begin a new round of quantitative easing in January, spending $45 billion per month to buy US government debt with no limit on the program's total purchases.

"Any QE should be positive for the yellow metal," said one wholesale gold dealer before Wednesday's announcement.

Yet after jumping $10 an ounce to a 2-week high of $1723 on the news, the Gold Price then fell back, dropping through $1700 at the start of Asian trade.

"What is behind this weakness?" asks Dubai-based gold dealer INTL FCStone.

"We suspect that with the Fed now on a prolonged easy stance, the lack of progress coming out of Washington with respect to the fiscal cliff talks [regarding $600bn of scheduled US spending cuts and tax hikes] is causing increasing concern.

"We would rather watch things from the sidelines for the time being, as the markets are getting too choppy to trade."

More than 60% of the new, open-ended QE program will be spent on medium and long-term US Treasury bonds, the New York Fed said yesterday.

Yet longer-dated US bonds fell early Thursday, pushing the interest rates they offer to investors higher.

The US Dollar meantime reversed an overnight drop versus the Euro and British Pound, helping the gold price in those currencies recover a little from 1-week lows.

Silver fell to $32.79 on Thursday morning, down $1.00 per ounce from Wednesday's 2-week high.

"We remain gold bulls," says Swiss investment and bullion bank UBS in a new commodities review today.

"Ongoing uncertainty around US fiscal issues, together with the view that major central banks will maintain loose monetary policies for longer, are key supports of our outlook.

"Gold's 'X-factor' is a resolution [to the fiscal cliff] that includes a lift to the debt ceiling which, in turn, increases the likelihood of ratings agency action [ie, downgrading the United States' long-term credit rating], boosting gold's popularity in 2013."

The Bank of Japan is meantime planning to allow hedge funds and other financial speculators to receive money from its quantitative easing program, according to Bloomberg, removing the current restriction on interbank lending.

Bloomberg's "insider sources" also say the BoJ wants to avoid boosting Japan's huge government debts, and so will target private-sector assets with its newly-created money instead.

"While the Yen has fallen almost 5% against the Dollar in the past month," notes the newswire, "it's still stronger than the ¥100 per Dollar that Nissan Motor Co. chief executive Carlos Ghosn said is the currency's 'neutral range'."

The Swiss National Bank remains "prepared to buy foreign currency in unlimited quantities" it said again today, creating and selling Francs on the FX market to its hold its value beneath €1.20.

Swiss banking giant UBS this week joined its rival Credit Suisse in setting its short-term interest rate for depositors below zero, charging account holders for running a positive balance.

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.

Adrian Ash Archive

© 2005-2016 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

Catching a Falling Financial Knife