Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Trying to Buy Coinbase Stock on IPO Day - Institutional Investors Freeze out Retail Investors - 15th Apr 21
Stocks or Gold – Which Is in the Catbird Seat? - 15th Apr 21
Time For A Stock Market Melt-Up - 15th Apr 21
Stocks Bull Market Progression Now Shows Base Metal Strength - 15th Apr 21
AI Tech Stocks Buy Ratings, Levels and Valuations - 14th Apr 21
Easy 10% to 15% Overclock for 5600x, 5900x, 5950x Using AMD Ryzen Master Precision Boost Overdrive - 14th Apr 21
The Current Cannabis Sector Rally Is Pointing To Another Breakout - 14th Apr 21
U.S. Dollar Junk Bond Market The Easiest Money in History - 14th Apr 21
The SPY Is Nearing Resistance @ $410… What Is Next? - 14th Apr 21
The Curious Stock Market Staircase Rally - 14th Apr 21
Stocks are Heating Up - 14th Apr 21
Two Methods in Calculating For R&D Tax Credits - 14th Apr 21
Stock Market Minor Correction Due - 13th Apr 21
How to Feed Budgies Cucumbers - Best Vegetables Feeding for the First Time, Parakeet Care UK - 13th Apr 21
Biggest Inflation Threat in 40 Years Looms over Markets - 13th Apr 21
How to Get Rich with the Pareto Distribution - Tesco Example - 13th Apr 21
Litecoin and Bitcoin-Which Is Better? - 13th Apr 21
The Major Advantages Of Getting Your PhD Online - 12th Apr 21
Covid-19 Pandemic Current State for UK, US, Europe, Brazil Vaccinations vs Lockdown's Third Wave - 12th Apr 21
Why These Stock Market Indicators Should Grab Your Full Attention - 12th Apr 21
Rising Debt Means a Weaker US Dollar - 12th Apr 21
Another Gold Stocks Upleg - 12th Apr 21
AMD The ZEN Tech Stock - 12th Apr 21
Overclockers UK Build Quality - Why Glue Fan to CPU Heat sink Instead of Using Supplied Clips? - 12th Apr 21 -
What are the Key Capabilities You Should Look for in Fleet Management Software? - 12th Apr 21
What Is Bitcoin Gold? - 12th Apr 21
UK Covd-19 FREE Lateral Flow Self Testing Kits How Use for the First Time at Home - 10th Apr 21
NVIDIA Stock ARMED and Dangeorus! - 10th Apr 21
The History of Bitcoin Hard Forks - 10th Apr 21
Gold Mining Stocks: A House Built on Shaky Ground - 9th Apr 21
Stock Market On the Verge of a Pullback - 9th Apr 21
What Is Bitcoin Unlimited? - 9th Apr 21
Most Money Managers Gamble With Your Money - 9th Apr 21
Top 5 Evolving Trends For Mobile Casinos - 9th Apr 21
Top 5 AI Tech Stocks Investing 2021 Analysis - 8th Apr 21
Dow Stock Market Trend Forecast 2021 - Crash or Continuing Bull Run? - 8th Apr 21
Don’t Be Fooled by the Stock Market Rally - 8th Apr 21
Gold and Latin: Twin Pillars of Western Rejuvenation - 8th Apr 21
Stronger US Dollar Reacts To Global Market Concerns – Which ETFs Will Benefit? Part II - 8th Apr 21
You're invited: Spot the Next BIG Move in Oil, Gas, Energy ETFs - 8th Apr 21
Ladies and Gentlemen, Mr US Dollar is Back - 8th Apr 21
Stock Market New S&P 500 Highs or Metals Rising? - 8th Apr 21
Microsoft AI Azure Cloud Computing Driving Tech Giant Profits - 7th Apr 21
Amazon Tech Stock PRIMEDAY SALE- 7th Apr 21
The US has Metals Problem - Lithium, Graphite, Copper, Nickel Supplies - 7th Apr 21
Yes, the Fed Will Cover Biden’s $4 Trillion Deficit - 7th Apr 21
S&P 500 Fireworks and Gold Going Stronger - 7th Apr 21
Stock Market Perceived Vs. Actual Risks: The Key To Success - 7th Apr 21
Investing in Google Deep Mind AI 2021 (Alphabet) - 6th Apr 21
Which ETFs Will Benefit As A Stronger US Dollar Reacts To Global Market Concerns - 6th Apr 21
Staying Out of the Red: Financial Tips for Kent Homeowners - 6th Apr 21
Stock Market Pushing Higher - 6th Apr 21
Inflation Fears Rise on Biden’s $3.9 TRILLION in Deficit Spending - 6th Apr 21
Editing and Rendering Videos Whilst Background Crypto Mining Bitcoins with NiceHash, Davinci Resolve - 5th Apr 21
Why the Financial Gurus Are WRONG About Gold - 5th Apr 21
Will Biden’s Infrastructure Plan Rebuild Gold? - 5th Apr 21
Stocks All Time Highs and Gold Double Bottom - 5th Apr 21
All Tech Stocks Revolve Around This Disruptor - 5th Apr 21
Silver $100 Price Ahead - 4th Apr 21
Is Astra Zeneca Vaccine Safe? Risk of Blood Clots and What Side Effects During 8 Days After Jab - 4th Apr 21
Are Premium Bonds A Good Investment in 2021 vs Savings, AI Stocks and Housing Alternatives - 4th Apr 21
Penny Stocks Hit $2 Trillion - The Real Story Behind This "Road to Riches" Scheme - 4th Apr 21
Should Stock Markets Fear Inflation or Deflation? - 4th Apr 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Campaign Against Gold Has Failed Says Central Bank Think-Tank

Commodities / Gold and Silver 2013 Jan 11, 2013 - 07:14 AM GMT

By: Ben_Traynor

Commodities

WHOLESALE gold bullion prices dipped back below $1670 an ounce Friday morning in London, 0.9% up on where it started the week, after jumping 1% yesterday following the European Central Bank's decision to leave interest rates on hold, which was also followed by gains for the Euro.

Silver meantime drifted back below $30.70 an ounce this morning, while stock markets were little changed and commodities edged lower along with US Treasury bond prices.


Gold bullion could form part of "an immensely important phase in the history of world money," according to a report published today by the World Gold Council and produced by the Official Monetary and Financial Institutions Forum.

"Western economies have attempted to dismantle gold's monetary role," the report says,"[but] this has failed."

In the US, the Federal Reserve's policy of holding interest rates at near-zero for a prolonged period "may substantially increase the risks of future financial imbalances," said Federal Reserve Bank of Kansas president Esther George yesterday, adding that it could also "hamper attainment" of the Fed's 2% inflation target.

The Fed has targeted a Federal Funds Rate of 0.25% or lower since December 2008, and last month said its policymakers expect this rate will remain appropriate until unemployment falls to 6.5%. 

In recent months the Fed has also committed to buying $85 billion of US Treasuries and agency mortgage back securities each month "to support a stronger economic recovery", although these purchases have not as yet been linked to any target variable.

"Attempts to also put thresholds on the timing of asset purchases may be a bridge too far," St Louis Fed president James Bullard said Thursday.

Bullard and George are both voting members of the Federal Open Market Committee this year.

"Both these [policymakers'] comments suggest that the Fed may be getting close to preparing the markets for at least a partial withdrawal from its aggressive asset purchasing program, a likely negative for gold," says Ed Meir, metals analyst at brokerage INTL FCStone.

"However, we have yet to hear from the main man himself, Chairman Ben Bernanke, who will soon have to clarify where the Fed stands going forward and how much more money it is willing to throw into the system."

"With little sign that core FOMC members such as Bernanke and Yellen are shifting," adds a note from Standard Bank, "the Fed's QE is likely to continue for as far as the eye can see."

In Europe meantime, the Eurozone economy "should gradually recover" from recession later in 2013, European Central Bank president Mario Draghi told a press conference Thursday.

"Our accommodative monetary policy stance, together with significantly improved financial market confidence and reduced fragmentation, should work its way through to the economy, and global demand should strengthen," said Draghi, though he acknowledged that it is "too early to claim success".

"It is hard to see that the ECB could invent anything similar to an OMT for the real economy," argues ING economist Carsten Brzeski, referring to the ECB's Outright Monetary Transactions program announced last September, through which it would buy the bonds of governments that agree to the conditions of a bailout program, with a view to lowering their market borrowing costs.

"The ECB will secretly keep its fingers crossed, hoping that better financial-market conditions and structural reforms eventually really lead to an economic recovery."

The ECB left its main policy rate on hold at 0.75% yesterday, confounding those who had predicted a rate cut. 

"[We expect] the ECB is likely leave rates on hold for the remainder of the year," says HSBC analyst James Steel. 

"If the threat of further monetary easing is reduced and the Euro continues to strengthen as a result, then gold prices are likely to benefit, we believe."

The Euro jumped two cents against the Dollar to over $1.32 following the decision, while gold in Dollars rallied 1%.

Gold in Euros by contrast fell, hitting €40,422 per kilo (€1257 per ounce) this morning, down 0.8% on the week.

Over in China, consumer price inflation rose to 2.5% in December, higher than analysts were expecting and up from 2.0% a month earlier, official data published Friday show.

Japan's new prime minister Shinzo Abe announced a ¥10.3 trillion ($116 billion) stimulus package earlier today.

The package "will create wealth through economic growth," said Abe.
Japan's economy is currently in its fifth recession in fifteen years, while its debt-to-GDP ratio is around 220%, the Financial Times reports.

In India meantime, gold buying has "fizzled" since earlier in the week, when premiums over London prices hit two-month highs amid expectations of a hike in gold import duties.

"People are not interested in stocking up at these levels as prices have been in the same range for three or four days," one dealer at a private bullion importing bank told newswire Reuters this morning.

India's trade deficit meantime narrowed to $21.4 billion last month, down from $19.3 billion a month earlier, despite a 1.9% year-on-year drop in exports, a trade ministry official said Friday.

India's central bank last week proposed measures to curb gold bullion imports due to their role in exacerbating India's current account deficit.

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 2013

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

© 2005-2019 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