QE4 makes an impact on the gold market
This week’s gold value was highly affected by United States Federal Reserve’s newest round of monetary easing. The build up to Wednesday’s announcement gave the precious metal market a boost. As of Monday morning Gold is on the way up thanks to the United States Federal Reserve’s upcoming meetings on Tuesday and Wednesday of this week. There are rumors that a new round of monetary easing will be announced. “Market expectation is that there could be more quantitative easing towards the end of the month, and this will be supportive of Gold,” Lynette Tan, an analyst at Philip Futures in Singapore, said. As with prior easing measures, the Precious Metals markets tend to show a positive gain. Just as expected the news of a new round of easing was announced, however this time around the market did not take much notice. The Gold price rose only slightly Wednesday despite the Federal Reserve announcing an extension of government bond buying. Unlike past rounds of quantitative easing (QE) which instantly boosted the U.S. Gold market, analysts are predicting a slow climb for the yellow metal as further economic stimulus is expected to further weaken the dollar and drive up Precious Metals prices. Jeffrey Wright of Global Hunter Securities said the news of continued QE will “support Gold well into 2013, with volatile trading patterns along with profit-taking periods as well.” While the price did not go up a large amount, it did go up enough to trigger a large sell-off in the following days. Gold and silver remain down at mid-day Thursday as profit taking prompted by yesterday’s Federal Reserve announcement of increased monetary stimulus briefly boosted precious metals prices. With three weeks left until the end-of-year, it is little surprise that short-term investors, unsure of how the fiscal cliff situation will play out, have taken earnings. However, James Steel, an analyst at HSBC Securities stated that, “the ongoing monetary expansion is supportive of gold, especially if it is a factor weighing on the U.S. dollar.” Following previous Fed announcements of liberal government bond-buying initiatives, gold and other precious metals have benefited greatly in the short term. Some analysts are speculating that the goal of 6.5 percent unemployment has temporarily confused the gold market as past rounds of quantitative easing were set to be unlimited (a notion which has been positive for gold). As the weekend approaches, the gold price has settled and awaits the beginning of a new week.
Another week closer to the cliff
With the end of the calendar year less than three weeks away, it would be safe to say the impending fiscal cliff is looming large over the United States. The global markets and most investors are still awaiting the looming “fiscal cliff.” “There’s a 40 percent chance of a ‘fiscal cliff’ deal before year end,” Erskine Bowles, co-chair of President Obama’s 2012 debt commission, said. The low number isn’t very attractive to investors looking for stability, but Bowles continued, “The chances of getting it done are better and that’s what’s key.” All accounts indicate President Obama will not accept any deal unless taxes are increased for the top two percent of wage earners, while most Republicans say they will not accept any deal that raises taxes at all. Even with such serious consequences approaching at the end of the year, neither side seems willing to compromise. Republican Senator Tom Coburn of Oklahoma summed it up in an interview on Tuesday, saying, “There's no leadership in Washington either at the presidential level or the leadership level in Congress. People are playing to the media rather than playing to the future of the country.” House Speaker John Boehner commented Thursday,”Unfortunately, the White House is so unserious about cutting spending that it appears willing to slow-walk our economy right up to -- and over -- the fiscal cliff.” Senate Majority Leader Harry Reid is that “it's going to be extremely difficult to get [a deal] done before Christmas.” Bipartisan bickering over budget cuts and tax increases continue to push the Dec. 31 deadline. Even with such serious consequences approaching at the end of the year, neither side seems willing to compromise. Republican Senator Tom Coburn of Oklahoma summed it up in an interview on Tuesday, saying, “There's no leadership in Washington either at the presidential level or the leadership level in Congress. People are playing to the media rather than playing to the future of the country.”