Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
What ECB’s Tiering Means for Gold - 17th Nov 19
DOJ Asked to Examine New Systemic Risk in Gold & Silver Markets - 17th Nov 19
Dow Jones Stock Market Cycle Update and are we there yet? - 17th Nov 19
When the Crude Oil Price Collapses Below $40 What Happens? PART III - 17th Nov 19
If History Repeats, Gold is Headed to $8,000 - 17th Nov 19
All You Need To Know About Cryptocurrency - 17th Nov 19
What happens To The Global Economy If Oil Collapses Below $40 – Part II - 15th Nov 19
America’s Exceptionalism’s Non-intervention Slide to Conquest, Empire - and Socialism - 15th Nov 19
Five Gold Charts to Contemplate as We Prepare for the New Year - 15th Nov 19
Best Gaming CPU Nov 2019 - Budget, Mid and High End PC System Processors - 15th Nov 19
Lend Money Without A Credit Check — Is That Possible? - 15th Nov 19
Gold and Silver Capitulation Time - 14th Nov 19
The Case for a Silver Price Rally - 14th Nov 19
What Happens To The Global Economy If the Oil Price Collapses Below $40 - 14th Nov 19
7 days of Free FX + Crypto Forecasts -- Join in - 14th Nov 19
How to Use Price Cycles and Profit as a Swing Trader – SPX, Bonds, Gold, Nat Gas - 13th Nov 19
Morrisons Throwing Thousands of Bonus More Points at Big Spend Shoppers - JACKPOT! - 13th Nov 19
What to Do NOW in Case of a Future Banking System Breakdown - 13th Nov 19
Why China is likely to remain the ‘world’s factory’ for some time to come - 13th Nov 19
Gold Price Breaks Down, Waving Good-bye to the 2019 Rally - 12th Nov 19
Fed Can't See the Bubbles Through the Lather - 12th Nov 19
Double 11 Record Sales Signal Strength of Chinese Consumption - 12th Nov 19
Welcome to the Zombie-land Of Oil, Gold and Stocks Investing – Part II - 12th Nov 19
Gold Retest Coming - 12th Nov 19
New Evidence Futures Markets Are Built for Manipulation - 12th Nov 19
Next 5 Year Future Proof Gaming PC Build Spec November 2019 - Ryzen 9 3900x, RTX 2080Ti... - 12th Nov 19
Gold and Silver - The Two Horsemen - 11th Nov 19
Towards a Diverging BRIC Future - 11th Nov 19
Welcome to the Zombie-land Of Stock Market Investing - 11th Nov 19
Illiquidity & Gold And Silver In The End Game - 11th Nov 19
Key Things You Need to Know When Starting a Business - 11th Nov 19
Stock Market Cycles Peaking - 11th Nov 19
Avoid Emotional Investing in Cryptocurrency - 11th Nov 19
Australian Lithium Mines NOT Viable at Current Prices - 10th Nov 19
The 10 Highest Paying Jobs In Oil & Gas - 10th Nov 19
World's Major Gold Miners Target Copper Porphyries - 10th Nov 19
AMAZON NOVEMBER 2019 BARGAIN PRICES - WD My Book 8TB External Drive for £126 - 10th Nov 19
Gold & Silver to Head Dramatically Higher, Mirroring Palladium - 9th Nov 19
How Do YOU Know the Direction of a Market's Larger Trend? - 9th Nov 19
BEST Amazon SMART Scale To Aid Weight Loss for Christmas 2019 - 9th Nov 19
Why Every Investor Should Invest in Water - 8th Nov 19
Wait… Was That a Bullish Silver Reversal? - 8th Nov 19
Gold, Silver and Copper The 3 Metallic Amigos and the Macro Message - 8th Nov 19
Is China locking up Indonesian Nickel? - 8th Nov 19

Market Oracle FREE Newsletter

How To Buy Gold For $3 An Ounce

Gold "Fierce" If Fed Surprises

Commodities / Gold and Silver 2013 Sep 18, 2013 - 06:27 PM GMT

By: Adrian_Ash

Commodities

The WHOLESALE price of gold fell below $1300 for the first time in 6 weeks Wednesday morning in Asia, as traders in all markets awaited today's US Fed announcement on QE tapering.

Regaining that level in London – a record high when first reached 3 years ago next week – gold still held 7% beneath the start of September.


The US Dollar held flat meantime, as did US Treasury bonds.

World stock markets ticked up with commodities. Silver rallied 20c from an overnight low at $21.37 per ounce.

"Any surprise [on Fed tapering] could push gold prices fiercely in either direction," says a commodity trading desk's note.

Longer-term, "Tapering really removes the upside case for gold," reckons UBS commodity analyst Daniel Morgan in Sydney, speaking to Bloomberg.

"I don't see any big reasons to be bullish on gold in the short term."

Going further, analysts at Societe Generale today say that "Rate hikes will follow tapering, markets are too complacent," in a new cross-asset strategy report.

Recommending 7 key trades, "Switch out of emerging markets and associated commodities," the French investment bank and London bullion market maker says.

"Sell gold now," SocGen's report adds, pointing both to Fed tapering and "lower sovereign risk from the Eurozone."

Shorter-term ahead of today's US Fed policy statement, "A large part of the market is already short in anticipation of [tapering], says David Govett at brokers Marex.

"[So] if no taper is announced, gold will shoot straight back up as all the shorts run for cover," Govett believes, forced to close their bearish bets at rising prices.

Surveys and economists' comments today put the consensus expectation for QE tapering at $10-15 billion, cut from the current level of $85bn per month.

"If this [proves] the case gold is unlikely to come under further pressure," writes Eugen Weinberg's team at Commerzbank.

"Of greater importance will be the way Bernanke steers the market's expectations of future monetary policy measures [in his 14:30 ET press conference]."

But "we tend to believe," counters a note from London market-maker HSBC, "that the bulk of gold declines based on tapering are already largely factored into current prices."

After an initial knee-jerk drop, "[only] a heavier tapering program on a more limited timetable could lead to a second-round of sales," its precious metals analysts say.

UK policy makers at the Bank of England voted 9-0 this month to keep their quantitative easing unchanged, minutes from the Sept. meeting showed Wednesday morning.

As recently as last month, some members of the committee had seen a "compelling" case for extending the current £375 billion in QE – now used to buy one-third of all UK government debt in issue.

"As monetary conditions normalise," reckons Kevin Gardiner, Barclays' chief investment officer for Europe, "[gold] investment demand is expected to weakenwhile physical demand growth from India will likely remain soft."

World No.1 gold consumer India yesterday saw import duty on gold jewelry raised to 15%, giving domestic manufacturers a price advantage as gold bullion duty stayed at 10%.

"[Such] bearish news articles doing the rounds have precious metal investors spooked," says analyst Moudi Raad at refining and finance group MKS in Geneva.

Looking at the broader natural resources market, however, "Commodities continue to provide diversification versus stocks and bonds," says a new article from portfolio managers Nicholas Johnson and Greg Sharenow at Pimco, the $2 trillion California-based bond and asset management firm.

"[Commodities] are also one of the most potent ways to hedge against unexpected changes in inflation."

By Adrian Ash
BullionVault.com

Gold price chart, no delay   |   Buy gold online at live prices

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold and silver in Zurich, Switzerland for just 0.5% commission.

(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.

Adrian Ash 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