US’ Fiscal Cliff Would Support Gold
Gold and silver shifted again and finished
upwards last Thursday. During the past eight business days the prices of
precious metals shifted on a daily basis moving up and down the scale.
Precious metals’ recent rally coincided with the rise in other related
markets such as oil, Euro and stocks.
On Wednesday, gold rose by 0.34% and reached $1,729.4; Silver also increased by 1.29% to $33.36. During November, gold rose by 0.6%; silver, by 3.22%.
Gold prices edged up on Thursday too. A good Chinese manufacturing data report and hope for Greece Bail out boosted equity lifted the euro against the dollar and pushed up gold prices.
Prices were held in a tight range but trading activity was light as Wall Street remained closed due to US Thanksgiving holiday.
World stocks too extended a weeklong rally as the survey reports from US and China strengthened the confidence over growth position. Moreover Euro zone data was also much better than expected.
A report showed China’s manufacturing Purchasing Managers Index rose to a 13-month high of 50.4 in November, while euro zone data showed manufacturing activity slowed less than expected in November.
A good manufacturing data, means that there will be increased in demand for gold from China which has already overtaken India as the worlds largest gold consumer this year.
The meeting of the Federal Open Market committee on Dec11-12 is expected to bring about further monetary easing policies. This may sustain gold prices.
Currently for the Fed, the two main topics in the agenda are- one the ‘Operation Twist’ and secondly the QE3.
Operation Twist involves the extension of the average maturity of the Fed’s securities portfolio through the simultaneous sale of short-term Treasuries and the purchase of longer-term ones.
Quantitative Easing 3, better known as QE3 is the outright monthly purchase of $40 billion a month in agency mortgage-backed securities.
Now the FOMC may shift to another large scale asset purchase program as the FED cannot continue ‘Operation Twist’ since holdings of short term Treasuries have been exhausted.
Recently when the Fed announced the launch of QE3, gold prices shot up.
The same is expected to happen with gold if any such announcement by the Fed of another round of quantitative easing is made.
Any further QE3 would prove to be bullish for gold. Another important factor for gold would be the fiscal cliff. If there is a good resolution on the fiscal cliff then gold prices might go down.
However, Federal Reserve chairman Ben Bernanke on Wednesday repeated a warning that failing to avert a move towards the cliff could lead to recession, and said worries over how budget negotiations will be resolved were already damaging growth. The US drifting into a fiscal cliff similar to Europe would prove to be a good support for gold and of all goes well then gold might cross the 1740 mark too.
On Wednesday, gold rose by 0.34% and reached $1,729.4; Silver also increased by 1.29% to $33.36. During November, gold rose by 0.6%; silver, by 3.22%.
Gold prices edged up on Thursday too. A good Chinese manufacturing data report and hope for Greece Bail out boosted equity lifted the euro against the dollar and pushed up gold prices.
Prices were held in a tight range but trading activity was light as Wall Street remained closed due to US Thanksgiving holiday.
World stocks too extended a weeklong rally as the survey reports from US and China strengthened the confidence over growth position. Moreover Euro zone data was also much better than expected.
A report showed China’s manufacturing Purchasing Managers Index rose to a 13-month high of 50.4 in November, while euro zone data showed manufacturing activity slowed less than expected in November.
A good manufacturing data, means that there will be increased in demand for gold from China which has already overtaken India as the worlds largest gold consumer this year.
The meeting of the Federal Open Market committee on Dec11-12 is expected to bring about further monetary easing policies. This may sustain gold prices.
Currently for the Fed, the two main topics in the agenda are- one the ‘Operation Twist’ and secondly the QE3.
Operation Twist involves the extension of the average maturity of the Fed’s securities portfolio through the simultaneous sale of short-term Treasuries and the purchase of longer-term ones.
Quantitative Easing 3, better known as QE3 is the outright monthly purchase of $40 billion a month in agency mortgage-backed securities.
Now the FOMC may shift to another large scale asset purchase program as the FED cannot continue ‘Operation Twist’ since holdings of short term Treasuries have been exhausted.
Recently when the Fed announced the launch of QE3, gold prices shot up.
The same is expected to happen with gold if any such announcement by the Fed of another round of quantitative easing is made.
Any further QE3 would prove to be bullish for gold. Another important factor for gold would be the fiscal cliff. If there is a good resolution on the fiscal cliff then gold prices might go down.
However, Federal Reserve chairman Ben Bernanke on Wednesday repeated a warning that failing to avert a move towards the cliff could lead to recession, and said worries over how budget negotiations will be resolved were already damaging growth. The US drifting into a fiscal cliff similar to Europe would prove to be a good support for gold and of all goes well then gold might cross the 1740 mark too.
No comments:
Post a Comment