Tag Archives: Federal Reserve

Feb 04

Price of Gold Weekly Recap – January 28-February 1, 2013

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Monday Open: $1,654.50
Weekly High: $1,681.90
Weekly Low: $1,654.50
Friday Close: $1,667.90

It was a good week for gold after many U.S. economic reports and the Federal Reserve’s regular meeting concurred that the U.S. economy is not yet in a state of repair strong enough to push down gold. Following a bearish decline from last week, this week closed on a higher note than it opened.

Monday started off sluggish, a little flat on a relatively strong dollar. Most of Monday was spent in anticipation of news to come later in the week. Tuesday rallied a little bit as the dollar sunk slightly, and a Consumer Confidence report revealed worse than expected economic data – a 58.6 rating, well below the 64.0 expected mark.

Wednesday was the real day of growth for gold this week. The price of gold was bolstered by the Federal Reserve’s FOMC meeting, in which Chairman Ben Bernanke reiterated the low interest rates and bond-buying program that was set in motion at the end of last year. Concerns have arisen lately that the Fed might pull back on their quantitative easing should the economy show considerable improvement, but the U.S. GDP report released this week showed that the country’s economy had actually contracted 0.1% in the fourth quarter of 2012. Bernanke confirmed that interest rates would remain negligible until unemployment hits 6.5%.

Unfortunately for gold, the yellow metal gave back all its gains on Thursday, despite bullish factors in the marketplace like a weak dollar and poor economic data. Though no one single external factor can be pinpointed for this loss, the drop was probably due to profit-taking from short-term traders.

Friday saw a continued release of negative U.S. economic data, which gave a small spike to the price of gold. The U.S. jobless claims report missed their mark by 38,000, ticking the unemployment rate up to 7.9%. However, later in the day a stronger manufacturing report was released, undoing many of the slight gains that had occurred earlier in the day.

Next week, gold is predicted to stay in the $1,650 to $1,700 range, with the European Central Bank meeting on traders’ radar.

Jan 11

Price of Gold Weekly Recap – January 7-11, 2013

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Monday Open: $1,658.90
Weekly High: $1,678.90
Weekly Low: $1,646.10
Friday Close: $1,660.30

Gold’s begun the year on a volatile sprint toward an uncertain future. Just barely adding one more notch on a twelve year upward trend at the end of 2012, the precious metal spent this week gaining and losing momentum by turns. After the Federal Reserve’s hints at lessening quantitative easing last week, the market has been shifty, though no real news has broken. The change in the price of gold from the week’s beginning to end is negligible, hovering around $1,660.

Monday opened the markets to hit the week’s low after traders were still processing the Fed’s minute’s from last week. The $1,645 level gold hit is the lowest since mid-August 2012, and it continues a six-week downturn. However, regarding the Fed’s foreshadowing, it’s not overly likely that the Fed will change its policy anytime soon. Some of the weightiest names in the Fed – ChairmanBen Bernanke, Vice Chair Janet Yellen and New York Fed President William Dudley – aim to retain the status quo. Furthermore, some of the world’s most prominent investment strategists, including PIMCO’s Bill Gross and DoubleLine Capital’s Jeffrey Gundlach, do not expect to see the Fed changing tactics in the near future.

Tuesday rebounded a little bit to eke its way over the $1,650 mark. Wednesday swayed up and down around that range, ending a little higher on a dipping dollar. There weren’t too many external circumstances to affect the price of gold this week, though traders are waiting to see what U.S. lawmakers will do next, and hinging on fresh economic data from China ahead of the Chinese New Year. Usually, the Chinese New Year is a great time for gold, but this year’s gains are uncertain.

Thursday saw a gold rally after the European Central Bank meeting, in which it was decided that low interest rates would remain unchanged. The Bank President related to his constituents a positive outlook for economic growth. The Bank of England will not expand its quantitative easing program.

From the nearly $1,680 high of Thursday, gold plummeted back down to Monday’s levels on Friday, largely due to fresh economic data from China. The Chinese consumer-price-index flew up 2.5%, ahead of economists’ expectations, indicating higher inflation. The fear for gold is that the Chinese government may enact cautionary measures against inflation, tightening economic policies.

The jury is still undecided on the future for gold, but only time will tell whether 2013 will prove to be the end of gold’s bullish journey or whether the yellow metal has just been getting over a slump toward even greater heights.

Jan 04

Price of Gold Weekly Recap – December 31, 2012-January 4, 2013

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Monday Open: $1,675.20
Weekly High: $1,689.50
Weekly Low: $1,628.00
Friday Close: $1,651.70

Gold ended 2012 with a 12 year hot streak. The past decade has treated gold very well, and this yellow metal has been the talk of the town amid a global recession. Seen by investors as a safe haven, gobbled up by governments as alternative currency and watched by many as an indicator of economic turmoil, gold has had a large role in global finances in the past ten years. Although gold closed this year nearly $300 below the all-time high of $1,900 from 2011, the price of gold is still at a remarkable high, and boasts a 6% increase from the price at the end of 2011.

The markets were silent Monday and Tuesday for the New Year holiday, but reopened with a bang on Wednesday. Starting the year off right, gold responded well to the announcement on Monday that U.S. policymakers had reached an agreement regarding the fiscal cliff. Wednesday saw this week’s high of around $1,690. The fiscal cliff agreement, which had worried investors and citizens alike, rallied a global spike in trading around the globe.

Thursday, however, gold started to dip after better-than-expected unemployment data for the U.S. was released. A firmer dollar also slipped gold down a little, as these factors lessen the strength of gold as a safe haven investment.

Friday also saw losses in the gold market as investors worriedly responded to the previous day’s Federal Reserve meeting, in which members expressed mixed ideas about keeping the loose monetary policy that had been in place all of 2012. After the prolonged fiscal cliff agreement (a decision wasn’t reached until after December 31st, the cutoff date) Federal Reserve members discussed shortening the length of time for the previously decided mortgage-backed securities and long-term Treasury bonds. Some believe the policies should last until the end of 2013, some think they should end before the year, and some think there even needs to be further measures implemented.

These loose monetary agreements keep interest rates low, which at once help the economy bolster back but also create conditions rife for inflation, a positive sign for the hedge fund gold. With stricter Fed policies, gold may not be seen as such a secure hedge fund. Friday saw prices drop to the lowest since August. Gold investors will be keeping a very close eye on the Fed’s moves.

Dec 14

Price of Gold Weekly Recap – December 10-14, 2012

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Monday Open: $1,711.90
Weekly High: $1,722.00
Weekly Low: $1,692.90
Friday Close: $1,696.30

The big news in gold trading this week was the two-day FOMC conference, economic reports for major world economies, and an automatic trading sell-off in Asian trading. The FOMC conference spiked prices on Wednesday, then sell-off sprees dropped the price for almost no reason on Thursday. Speculation abounds about whether gold has reached its limit as we head into 2013.

Monday was relatively quiet, and not much trading occurred after President Obama and House Speaker Boehner met face to face on Sunday to discuss the fiscal cliff crisis. Traders in all sectors are worried what will or won’t happen before the end of the year, and the fiscal cliff still tends to bring all commodities sectors down, but nothing new brought any light to the situation. The OECD released a report that projected that economies of the U.S., the U.K and China will grow over 2013, but that those of the European Union, Japan and Canada are expected to contract. If world economies are bouncing back, this could be a bearish factor for gold.

Yet, gold responded positively to the news from Tuesday and Wednesday’s FOMC meetings that the Federal Reserve plans to keep interest rates low for approximately the next three years, or until unemployment reaches 6.5%.  The meeting discussed the end of “Operation Twist,” and the beginning of a new bond-buying program, which will entail buying $45 billion of Treasury bonds. The price of gold rose almost $9 on Wednesday.

Yet, Thursday saw some unexpected drops from that high, as Asian trading enacted some automatic sell-stops, which forces selling once a price reaches a certain point. This same trend happened a few weeks ago, for no logical reason, adding an unpredictable factor to gold trading.

The European Union, meanwhile, reached an agreement to appoint a single bank supervisor and EU banking union, which will be a positive sign for their economic recovery. Friday stayed at the low end of the sell-off range to close the week slightly below $1,700.

Gold is undoubtedly a volatile investment at this point in time, and some predict bearish futures for gold, citing that the precious metal is nearing the end of its decade-long streak, but others retain that with the world’s biggest economies still in flux and in the midst of inflation, gold is still a safe hedge fund. Goldman Sachs predicted the end of the gold, while Morgan Stanley credited gold as the “best commodity for 2013.”

Dec 07

Price of Gold Weekly Recap – December 3-7, 2012

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Monday Open: $1,717.20
Weekly High: $1,717.20
Weekly Low: $1,686.30
Friday Close: $1,702.80

It seems like the only thing gold investors could talk about this week was the upcoming fiscal cliff, a threat that sunk the price of gold to its lowest in four weeks, plunging the price down below $1,700. The price of gold stayed low all week but managed to dip up slightly about the $1,700 mark on Friday.

Negotiations about the fiscal cliff continued this week, but Democrats and Republicans are still undecided about how to approach the looming crisis. If an agreement is not reached by Jan. 1, automatic tax increases and spending cuts from the Bush era will go into effect. Economists believe this might send the U.S. back into a recession. Though it seems likely that politicians will indeed reach some sort of last-minute conclusion to avoid a recession, the uncertainty surrounding the matter is a drain on many markets, gold not excepted.

Monday dropped about $15, then Tuesday took a net drop of around $20, next to hit Wednesday’s low of around $1,685 – the lowest in a month. Thursday stayed fairly flat.

This week was primarily led by economic speculation as to the U.S. government’s policies regarding the fiscal cliff, but investors also looked forward to Friday when the Labor Department would release employment data for November. And indeed, Friday moved prices up a little bit.

December 10-12th is also a series of days to look forward to for gold traders, as it is the FOMC’s next annual open market meeting, in which they will discuss QE3 policies. After this past September when the Fed eased up on monetary policy, to the delight of precious metals investors, many expect that they will continue to enact policies to boost the economy, which in turn will bolster gold as a safe haven. “Operation Twist” will come to an end, a program in which the Fed sells $45 billion of short-term treasuries each month in order to buy long-term treasuries. Most do not think the Fed will continue Operation Twist, instead most likely opting to engage in a conventional bond-buying program, which would increase money-printing, inflation, and thus the confidence in gold.

Goldman Sachs predicts that the slow U.S. economic growth will force the Fed to keep printing more money for the next two years, a positive sign for gold.

Considering the volatility that gold is facing right now, some are questioning the reality of the yellow metal as a true safe haven. Still, in a Kitco survey, out of 24 respondents, 15 see prices moving up next week and 5 see prices going down, with the rest neutral.

Nov 23

Price of Gold Weekly Recap – November 19-23, 2012

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Monday Open: $1,729.90
Weekly High: $,1751.90
Weekly Low: $1,722.20
Friday Close: $1,751.90

It was a fairly quiet week for gold, with a few economic indications in the U.S. and Europe not doing much to fluctuate the price, though the yellow metal had a lift at the end of the week.

Monday’s trading started out bullish on a weak dollar and higher crude oil prices, combined with positive economic news in European and Asian markets. Also, President Obama gave indications that the fiscal cliff crisis is likely to be solved before the end of year.

In the Middle East, tensions were high between Israel, Egypt and Iran, but this didn’t downgrade the metal in any significant way. Geopoliticizing tensions tend to promote first a sluggishness in gold trading at first, but if they escalate, consequently they promote a rush toward gold as a stabilizing investment.

Tuesday saw pretty much all of Monday’s gains pull back, as the Middle East experienced further rifts. Ben Bernake, Chairman of the Federal Reserve, made an announcement that the fiscal cliff crisis still looms ahead unresolved, but gold only lowered slightly. Even if the fiscal cliff does pass without action, gold may be positively affected as a safe haven in an unstable economy.

Euro zone officials held a meeting on Tuesday to discuss Greece’s debt bailout, but reached no agreement, which did little to affect the price of gold except lower it slightly on continued feelings of uncertainty. Wednesday was a slow trading day ahead of the U.S. holiday weekend. In Middle Eastern news, Israel and Hamas reached a cease-fire agreement, which also affected gold little.

U.S. markets were closed Thursday for Thanksgiving and early Friday morning, so only a hush was heard on the gold front. Friday saw a fairly significant jump up about $20 from a weaker dollar, and, presumably, anticipation of Black Friday sales data.

Next week, the Israel-Hamas conflict, the Greek bailout and the Federal Reserve’s actions concerning the fiscal cliff will all be factors to monitor.

Nov 02

Price of Gold Weekly Recap – October 29-November 2, 2012

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Monday Open: $1,710.50
Weekly High: $1,726.50
Weekly Low: $1,686.20
Friday Close: $1,686.20

Gold traded very lightly this week, mostly due to the closure of the New York Stock Exchange on Monday and Tuesday in light of Superstorm Sandy. Some U.S. economic reports released later in the week accounted for the sustained dip below $1,700 that closed the market on Friday.

Hurricane Sandy ravaged the East Coast, causing the first shutdown of U.S. stock markets due to weather in 27 years. No trading occurred Monday and Tuesday as energies were focused on mitigating the effects of the storm, but the Exchange opened smoothly again on Wednesday morning.

This week, economic reports from the U.S. on Friday and from China on Thursday were the causes of anticipation amongst gold stock traders. Wednesday was mostly a bargain hunting day as some joined the market after the dip, but it was still quiet after the recovery of the storm. Positive talks of Greece emerging from the eurozone also caused slight upward movement.

Other national banks have indicated economic stimulus this week, including the Bank of Japan, which continued its asset-buying trend and increased their stores by the equivalent of $137 billion. China’s economic data released on Thursday revealed better than expected growth in manufacturing, which translates into positive news for the precious metals sector, causing slightly higher trading Thursday.

The dip in the week occurred on Friday. U.S. economic reports released on Friday morning revealed unsettling news for gold, causing a drop of $40, the largest loss in four months, to nosedive below $1,700. Payroll data showed numbers higher than expected for October, translating into less pressure on the Federal Reserve to continue easing monetary policy. In October, employers in America added 171,000 jobs and factories expanded by 4.8%, both higher than forecasts predicted. The dollar also rose the most since July 20th, creating less incentive for investment in the safe haven of gold.

Also on the horizon is the U.S. presidential election on November 6th, which could change the course of gold depending on the elected President’s policies. Based on a survey by Bloomberg, gold is still bullish. 18 of 27 analysts expect to see gold rise next week, four were neutral and five were bearish.

Oct 26

Price of Gold Weekly Recap – October 22-26, 2012

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Monday Open: $1,729.50
Weekly High: $1,729.50
Weekly Low: $1,699.50
Friday Close: $1,1712.00

The gold market was pretty quiet this week, taking a few ups and downs based on market pressure, a Federal Reserve meeting and continued expectations about global stimulus measures. No major price shifts occurred; instead, gold operated within a pretty stable trading range, only dipping slightly below $1,700 midweek on Fed fears, but quickly regaining to the above $1,700 range. The major news this week was a statement released by the Federal Reserve that confirmed stimulus measures but did not announce any new policies.

Monday and Tuesday’s trading were basically fear-based sell-offs anticipating the Fed’s statement, compounded by a stronger dollar and outside markets. There was not great anticipation for the Fed’s meeting minutes, and economists generally didn’t expect any fresh stimulus measures, but there was a slight fear that since the dollar has been performing well lately, the Fed could decide to pull back their monetary easing at any time.

The euro dropped Tuesday as Moody’s downgraded Spain’s credit rating once again and reports said Spain’s economy contracted .4% more than last quarter. The dollar was also trading higher on Tuesday as gold hit a new 6-week low.

Once the Fed statement was released on Wednesday, gold jumped about $7 on the news that the Fed will be continuing its economic stimulus measures. However, it dropped all the way below $1,700 a few minutes later, after people had time to read through the FOMC minutes. The Fed reiterated its plan to stick with zero percent interest rates until 2015, despite gains already perceived in the housing sector.

Thursday saw gold rise on expectations that the bank of Japan may be considering stimulus measures, a rising euro and anticipation of the wedding season in India, which begins mid-November.

Friday was a slow day in the market, characterized by risk-off trading before the weekend. France got their credit score downgraded and Greece faced fresh economic woes; the gold season has started in India; and the U.S. reported slight gains in economic growth, strengthening the dollar.

Significantly, news has been traveling that Ben Bernake would probably not be running for office as Federal Reserve chairman for another term even if President Obama is reelected. This causes some concern for gold bugs, as Bernake is central to keeping interest rates low, an asset for gold.

“Without Bernanke, monetary stimulus from the Federal Reserve could be greatly reduced, and that will weigh on the price of gold,” said Jeffrey Sica of billion-dollar investment agency SICA Wealth.

The U.S. presidential election weighs in on many traders’ buying patterns, along with the anticipation of a “fiscal cliff” as it is being called: if Congress doesn’t solidify a debt reduction plan by the end of the year, a series of automatic spending freezes and tax increases will be enacted.

Oct 19

Price of Gold Weekly Recap – October 15-19, 2012

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Monday Open: $1,737.30
Weekly High: $1,752.20
Weekly Low: $1,718.00
Friday Close: $1,720.80

Gold opened on a one-month low this week, rallied upwards, then shot back down to close bearishly on a newer one-month low due to global economic pressures. There are a few global factors that contributed to the spikes this week, but as a whole gold is still operating at roughly $200 higher than the $1,500-$1,550 range that dominated most of the first half of 2012.

In a weak global economy, gold acts as a hedge fund and has been on the upswing for the past four years, largely due to economic restructuring of major economic states, not least of which has been the U.S. Federal Reserve’s easy monetary policies. Monday, however, China was on the forefront of traders’ minds, and gold dipped down from the weekend because data revealed that China, whose growth has been slow over the year, though still significantly ahead of the U.S., might not be considering economic restructuring if they can help it. Gold has risen in the past few months in large part due to America and Europe’s monetary loosening, and the same has been expected for China, but September data showed that China’s inflation rate dropped from 2% to 1.9% and their imports grew by 2.4%. This means uncertain trading for gold.

“The bottom line is China’s in this kind of gray area where…things aren’t as good as people want them to be but they’re not bad enough to continue to just throw money at the market,” Matt Zeman of Kingsview Financial said.

Tuesday, gold responded well after the U.S. released positive news on consumer price data, confirming that there is no current threat of significant inflation. If inflation were to appear on the horizon, the Federal Reserve may change their policies to curb price hikes, which would negatively affect gold. Without immediate fear of inflation, the Fed can continue its trend of monetary easing. The dollar also slipped a little compared to other currencies.

However, Wednesday reports on U.S. housing data served to balance out any permanent feeling of comfort regarding the dollar. Housing data was positive, implying that if that trend continues, the Fed may start to slow down their stimulus plans. Spain also received some important news; the struggling country’s credit rating was left unchanged rather than downgraded, and there is still talk of Spain requesting a bailout. Germany also joined the conversation by announcing a lower economic growth rate for 2013 than previously anticipated.

Gold traders anticipated Thursday as results from China’s third-quarter gross domestic product would be released and the European summit would begin. Data from China on Thursday confirmed the foreshadowing from Monday that China may not be as strongly considering economic boosting, since the outlook is good for economic growth.

Friday dropped gold back down below the initial trading point on Monday to a fresh one-month low. The dollar was trading higher on Friday, and the European summit meeting ended, revealing no news from Spain that the country would be asking for a bailout now. Economic uncertainties in all parts of the world contributed to an overall precarious feeling for unconvinced gold traders, causing many to flee the market by the end of the week.

Frank McGhee, precious metals trader of Integrated Brokerage Services LLC, put it this way: “People who rushed in for QE expecting to get a significant lift are getting out of the market.  The longer we don’t make a new high, the more people start getting nervous about where gold is trading.”

This week experienced a 2% drop in gold, the largest weekly decline in four months.

With noncommittal leaders in Spain, a U.S. election on the horizon, a stronger Chinese economy and the season for gold buying in India approaching, yet with a weak rupee, gold seems to be caught once again in a trading limbo. However, once the price of gold breaks $1,800, interest in this precious metal will surely return, as many investors see the yellow metal continuing to perform well in the long-term.

Oct 12

Price of Gold Weekly Recap – October 8-12, 2012

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Monday Open: $1,775.50
Weekly High: $1,775.50
Weekly Low: $1,754.10
Friday Close: $1,754.90

The price of gold this week fluctuated about $30 due to continuing uncertainty about the European debt crisis and the future of U.S. economic policy. Monday celebrated the American holiday of Columbus Day, so trading took a pause. There was slight risk-off trading, but the marketplace was quiet until Tuesday.

The yellow metal dropped about $10 on Tuesday after the International Monetary Fund lowered its predictions for world economic growth from 3.5% to 3.3%, reporting that the world’s industrial economies are at risk for a prolonged recession. Another reason for the drop on Tuesday was the ongoing conversation about Spain’s economic crisis, and uncertainty whether Spain really will ask for a bailout. After two days of meetings with eurozone finance ministers, no conclusion was reached and rioting continued in both Spain and Greece.

Last week, U.S. unemployment data revealed better than expected numbers, reporting that unemployment had dropped to 7.8%, so there is also some uncertainty for gold in this arena. Even though gold took a high turn a few weeks ago after Federal Reserve Chairman Ben Bernake agreed to third quarter quantitative easing, there is no guarantee how long his looser economic policies will last; the low interest rates and mortgage incentives are in place only until the U.S. labor market can show significant improvement.

Still, gold hovered in the upper $1,700 range this week. Wednesday was a general day of trading limbo, as some traders decided to sell off to reduce risk amid economic uncertainty, but the price remained fairly steady.

Thursday saw a slight jump for gold when U.S. economic data reported slightly higher jobless claims. Spain also had their credit score knocked down two points by credit rating agency Standard & Poor, but surprisingly the euro did not respond, and many continue to be optimistic that Spain will opt for a bailout.

It seems as if the U.S. if the major indicator of gold’s track upward or down, even though European and Chinese economies definitely play a hand in the cards. Still, the Fed’s decision to loosen monetary policy has been the singlemost significant factor for gold this year.

Stock market analyst Tom Kendall of Credit Suisse said, “Gold is going to take its biggest cue, as it has for the most recent past, from what happens in the U.S. in respect to the strength of the economic recovery and what that means for monetary policy.” He went on to say that it is fairly hard to predict the effect U.S. joblessness claims will have on gold now due to seasonality.

To recap the year so far, gold has risen about $215, or 13%, in 2012 with a majority of those gains, $165, occurring in the pas two months due to Fed monetary policy. Friday ended slightly lower but fairly quietly in trade-off anticipation of the weekend. Most polls show an even split as to how gold will perform next week.