Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
USDT Ponzi Scheme FINAL WARNING To EXIT Before Tether Collapses Crypto Exchange Markets - 22nd Jun 21
Stock Market Correction Starting - 22nd Jun 21
This Green SuperFuel Could Change Everything For the $14 Trillion Shipping Industry - 22nd Jun 21
Virgin Media Fibre Broadband Installation - What to Expect, Quality of Wiring, Service etc. - 21st Jun 21
Feel the Inflationary Heartbeat - 21st Jun 21
The Green Superfuel That Could Disrupt Global Energy Markers - 21st Jun 21
How Binance SCAMs Crypto Traders with UP DOWN Coins, Futures, Options and Leverage - Don't Get Bogdanoffed! - 20th Jun 21
Smart Money Accumulating Physical Silver Ahead Of New Basel III Regulations And Price Explosion To $44 - 20th Jun 21
Rambling Fed Triggers Gold/Silver Correction: Are Investors Being Duped? - 20th Jun 21
Gold: The Fed Wreaked Havoc on the Precious Metals - 20th Jun 21
Investing in the Tulip Crypto Mania 2021 - 19th Jun 21
Here’s Why Historic US Housing Market Boom Can Continue - 19th Jun 21
Cryptos: What the "Bizarre" World of Non-Fungible Tokens May Be Signaling - 19th Jun 21
Hyperinflationary Expectations: Reflections on Cryptocurrency and the Markets - 19th Jun 21
Gold Prices Investors beat Central Banks and Jewelry, as having the most Impact - 18th Jun 21
Has the Dust Settled After Fed Day? Not Just Yet - 18th Jun 21
Gold Asks: Will the Economic Boom Continue? - 18th Jun 21
STABLE COINS PONZI Crypto SCAM WARNING! Iron Titan CRASH to ZERO! Exit USDT While You Can! - 18th Jun 21
FOMC Surprise Takeaways - 18th Jun 21
Youtube Upload Stuck at 0% QUICK FIXES Solutions Tutorial - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations Video - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations and Trend Analysis into Market Correction - 17th Jun 21
Stocks, Gold, Silver Markets Inflation Tipping Point - 17th Jun 21
Letting Yourself Relax with Activities That You Might Not Have Considered - 17th Jun 21
RAMPANT MONEY PRINTING INFLATION BIG PICTURE! - 16th Jun 21
The Federal Reserve and Inflation - 16th Jun 21
Inflation Soars 5%! Will Gold Skyrocket? - 16th Jun 21
Stock Market Sentiment Speaks: Inflation Is For Fools - 16th Jun 21
Four News Events That Could Drive Gold Bullion Demand - 16th Jun 21
5 ways that crypto is changing the face of online casinos - 16th Jun 21
Transitory Inflation Debate - 15th Jun 21
USDX: The Cleanest Shirt Among the Dirty Laundry - 15th Jun 21
Inflation and Stock Market SPX Record Highs. PPI, FOMC Meeting in Focus - 15th Jun 21
Stock Market SPX 4310 Right Around the Corner! - 15th Jun 21
AI Stocks Strength vs Weakness - Why Selling Google or Facebook is a Big Mistake! - 14th Jun 21
The Bitcoin Crime Wave Hits - 14th Jun 21
Gold Time for Consolidation and Lower Volatility - 14th Jun 21
More Banks & Investors Are NOT Believing Fed Propaganda - 14th Jun 21
Market Inflation Bets – Squaring or Not - 14th Jun 21
Is Gold Really an Inflation Hedge? - 14th Jun 21
The FED Holds the Market. How Long Will It Last? - 14th Jun 21
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

FOMC Influencing Gold More Than Eurozone

Commodities / Gold and Silver 2012 Jun 19, 2012 - 07:55 AM GMT

By: Ben_Traynor

Commodities

Best Financial Markets Analysis ArticleTHE U.S. DOLLAR gold price hovered around $1630 an ounce during Tuesday morning's trading in London – in line with where it ended last week – while stocks and commodities were also broadly flat ahead of the latest Federal Reserve policy meeting.

The silver price traded in a tight range just below $29 an ounce – 1.7% up on Monday's low.


Over in India, traditionally the world's biggest gold buying nation, local press report that the Rupee gold price set a fresh record in Delhi Tuesday, as the Rupee fell against the Dollar on international currency markets.

"There has been very light buying from India, but it's really quiet there," says one Singapore-based dealer, adding that there has been a pickup in scrap gold bullion sales from Thailand.

"I guess there's a kind of wait-and-see attitude because there's a lot of uncertainty in the market."

"For the moment," adds Lynette Tan, investment analyst at Phillip Futures in Singapore, "we expect policy decisions from the Fed to influence the gold price more than risk appetite linked to the Euro crisis."

The Federal Open Market Committee meets today and tomorrow to decide any changes to US monetary policy.

"We would be quite surprised if we saw no [Fed policy] easing this week," says a note from Jan Hatzius, chief US economist at Goldman Sachs.

"We believe that an extension of Operation Twist could well be insufficient on its own and could thus be followed by additional easing action before long," added Hatzius, suggesting the Fed could consider a "sufficiently large program" of mortgage-backed securities purchases.

However, "the agency MBS market might have more trouble accommodating the Federal Reserve this time" says a note from Barclays. The Barclays economists point out that the Fed will be keen to avoid its actions creating "dislocations" in markets, meaning it could include more US Treasury bond buying in any new round of quantitative easing.

Here in Europe, Spain saw its borrowing costs rise to over 5% for one year – up from 1.985% last month – when it auctioned €2.4 billion of 12-Month bills on Tuesday. A further €639 million of 18-Month bills were sold at an average yield of 5.1%, up from 3.3% at the last similar auction.

Benchmark Spanish 10-year yields eased slightly following the auction, but remained above 7% by Tuesday lunchtime in London.

European leaders announced last week that Spain plans to borrow up to €100 billion from Eurozone rescue funds to finance the restructuring of its banking sector, with stress test results due to be published later this week.

"It is not at all clear whether Spain's rescue package will help bring about the definitive clean-up of its banking sector," says Nicholas Spiro, managing director of consultancy Spiro Sovereign Strategy, which specializes in sovereign credit risk.

"Spaniards, like the markets, fear the €100 billion credit line is the prelude to a full bailout accompanied by much stronger conditionality."

Elsewhere in Europe, investor sentiment in Germany has turned decidedly bearish in recent weeks, according to the widely-followed ZEW Indicator of Economic Sentiment. The indicator has fallen by 27.7 points – the biggest fall since 1998 – from 10.8 last month to -16.9.

The International Monetary Fund announced Monday that the amount of additional funding pledged by governments has risen from $430 billion to $456 billion.

The additional funds "Will be drawn only if they are needed as a second line of defense", IMF managing director Christine Lagarde said.

Eurozone governments "will take all necessary policy measures to safeguard the integrity and stability of the Euro area, including the functioning of financial markets and breaking the feedback loop between sovereigns and banks", according to a leaked draft of the communique from the G20 meeting in Mexico, which continued Tuesday.

"Trader concerns are being confounded by the apparent idleness at the G20," says one trader quoted by the Wall Street Journal.

"What was hoped would be a definitive meeting of the world's most powerful economies devising a solution to the slowing global growth story, unfortunately looks to be plagued with the same sort of inertia that led Eurozone policy makers to stand by as the crisis mushroomed."

Here in the UK meantime, consumer price inflation eased to 2.8% last month – down from 3.0% in April – according to consumer price index data published Tuesday. This is the first time CPI inflation has fallen below the Bank of England's upper tolerance of 3% since 2009.

Across the Atlantic, CME Group, which operates New York's Comex exchange, has announced plans to allow holders of short-dated gold options to exercise into gold futures positions at expiry, with effect from the start of next month – though CME tells Reuters it has no plans to extend this to longer-dated instruments. Currently, all gold options holders are only able to settle for cash.

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.


© 2005-2019 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