Tag Archives: Federal Reserve

Dec 16

Price of Gold Weekly Recap – December 9-13, 2013

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Monday Open: $1,234.30
Weekly High: $1,265.80
Weekly Low: $1,224.00
Friday Close: $1,237.50

Gold will end its 12-year bull run this year, analysts across the board conclude. After dropping around 20% since the beginning of the year, the yellow metal seems to have hit the end of its winning streak. Yet, despite short-term losses, many believe the price of gold has hit a bottom for the time being and still holds long-term staying power.

Monday’s gold prices remained fairly unchanged after the previous Friday’s bolstering U.S. jobs report, even gaining a few points. It was released on Friday that nationwide unemployment had reached its lowest level since 2008. Despite such news, gold did not respond in a significant way. This is one indication that the sellers may have all left the market.

One of the biggest price indicators for gold this year has been talk of the Federal Reserve ending its quantitative easing program on hopes that the economy is steadily improving. On Monday, President of the Richmond Federal Reserve Bank, Jeffrey Lacker, made a statement that the Fed will discuss bond tapering at its meeting next week. St. Louis Fed President James Bullard separately stated that he endorses a small December taper.

Despite this bearish news for gold, Tuesday actually saw price gains. This may mean that gold bulls are still optimistic. Many foresee that a few positive economic data points do not equate to long-term positive growth. This makes gold still a player on the field as an economic hedge fund. Forbes KITCO analysts also premise that gold may remain steady for the next 1-2 years but could gain momentum after that.

In other world economic news, on Wednesday Canadian gold miner IAMGOLD announced that gold prices were too low to pay dividends to their investors, so dividends are being suspended for the time being. On Thursday, Germany’s financial watchdog started an investigation into Deutsche Bank’s possible manipulation of gold and silver prices.

Gold investors anticipate next week’s Federal Reserve meeting for further clues about economic policies.

Dec 09

Price of Gold Weekly Recap – December 2-6, 2013

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Monday Open: $1,219.30
Weekly High: $1,248.90
Weekly Low: $1,212.50
Friday Close: $1,228.80

The gold market may be hitting a short- to medium- bottom. Despite many positive economic reports, gold didn’t flinch as much as might be expected.

Monday opened steady, with news about China potentially pulling back on their gold demand in 2014. Still, even though some analysts predict that China’s gold imports will drop 10% to 900 million tons, gold still clocks in as China’s second largest import and they surpass even India in gold demand.

Tuesday hit a five-month low by the end of the trading day ahead of multiple economic reports due out later in the week and an ADP report that showed a rise in employment for November. The drop, however, was tempered by a lower position of two key outside markets, oil and the U.S. dollar.

Wednesday regained Tuesday’s losses as bargain hunters entered the market. Overnight news brought a new element to the table: the OECD reported that inflation in the EU’s 34 member countries has been dropping dramatically. This means that bankers will likely keep a loose monetary policy so as to prevent deflation. This puts gold in a good position.

The price of gold fell again on Thursday, losing Wednesday’s gains ahead of the European Central Bank’s monthly monetary planning meeting and press conference.

On Friday, the U.S. employment report for November showed that the country added 203,000 non-farm jobs, higher than the expected 180,000. Unemployment also fell to 7.0%, the lowest it has been since 2008. Positive economic growth translates to poor performance for the yellow metal, and gold hit a fresh five-month low on the news. However, the price of gold rebounded fairly quickly and stayed steady, which indicates that a bottom may be near. Also to this point, the general sentiment in the gold market is that the U.S. Fed’s tapering program is very near, so prices are not changing as drastically as earlier in the year.

 

Nov 18

Price of Gold Weekly Recap – November 11-15, 2013

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Monday Open: $1,282.80
Weekly High: $1,286.10
Weekly Low: $1,266.20
Friday Close: $1,288.30

The week opened slow on a holiday (Armistice in Europe and Veteran’s Day in the U.S.), yet gold prices still took a nosedive overnight before the beginning of the week, after better-than-expected employment reports from the previous week.

Tuesday hit a four-week low on selling pressure. With improved economic reports in the U.S. comes heightened anxiety in the market place that the Fed will soon resume its talk of bond tapering. Asian demand for gold has also decreased, and the U.S. dollar has been strong for about two months now, an overall bearish factor for gold.

Wednesday closed on a new four-week low. Without any major world or economic news, the market is moving solely on technical selling and continued fears about the Federal Reserve. Some analysts have predicted that quantitative easing could start upon its end as soon as December, while others expect it for the beginning of the first quarter of next year. These predictions have moved nearer in time recently, with the strong economic data from the U.S. encouraging people to believe the time is soon. The real defining factor will be how long economic improvement can remain steady.

Thursday experienced a short rally after Janet Yellen, next Federal Reserve chairwoman, released remarks that U.S. monetary policy needs to remain accommodative so that unemployment can continue to decline and the economy can continue to improve. Her support of monetary stimulus is bullish for gold. Friday’s gold prices remained relatively unchanged as the yellow metal headed into the weekend with traders divided on the outlooks for gold.

Nov 11

Price of Gold Weekly Recap – November 4-8, 2013

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Monday Open: $1,314.60
Weekly High: $1,323.80
Weekly Low: $1,284.50
Friday Close: $1,288.80

Gold hit some bumps this week to close the trading day on Friday below the $1,300 mark. Monday began largely unchanged as two Fed officials gave strong indication that the bond tapering program would not begin until the economy has undergone significant improvement. (However, Friday’s economic reports caused this sentiment in the marketplace to become doubtful.)

Tuesday’s outside markets were bearish, with a higher dollar and lower crude oil. The low price of crude oil may indicate a hard time ahead for the commodities sector. Also on Tuesday, the ISM non-manufacturing report showed greater strength than expected, fueling some fear that the Fed may consider bond tapering sooner rather than later. China also reported more upbeat economic news, and leaders of the country are in conference about making economic reforms, which the market place will be anticipating in the near future.

The price of gold was bolstered slightly on Wednesday as the dollar sank and crude oil reached higher. The market place also anticipated the European Central Bank’s meeting on Thursday, as there were suspicions that the ECB will soon ease its monetary policy and lower interest rates.

Though analysts widely did not expect the ECB to make a move, they did in fact decide to lower interest rates on Thursday. Gold saw a short high after the news, since the deflationary measure increases the value of gold as a hedge fund against failing economies. However, despite the news from the ECB, the price of gold dropped to a three-week low on Thursday after surprisingly good U.S. economic reports.

Positive U.S. economic reports also racked the gold market place on Friday, continuing a downward trend. The U.S. employment report for October showed unexpected growth, with 204,000 new non-farm jobs, compared with the expected 120,000 increase. Gold responded poorly to this news, closing the week low, with increased anxiety that this news may prod the Fed to begin anti-deflationary measures soon.

Oct 28

Price of Gold Weekly Recap – October 21-25, 2013

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Monday Open: $1,316.30
Weekly High: $1,353.40
Weekly Low: $1,312.30
Friday Close: $1,352.60

With the U.S. government reopened this week, backed up economic reports were released, positively influencing the price of gold. Thursday marked a four-week high and the week was overall bullish.

Monday opened the week near steady from last Friday’s closing numbers, with the market in anticipation of Tuesday when U.S. economic data was scheduled for release three weeks late.

Tuesday’s data encouraged the price of gold to make some significant gains. The main item on the list was September’s nonfarm payroll data, which showed less-than-expected growth. Unemployment was reported to have receded less than expected, which gives traders reason to believe the Fed will not begin its bond tapering program quite yet.

Wednesday’s gold prices slipped slightly on short-term profit-taking, but Thursday regained those losses and flew up to a four-week high on a few combined bullish factors. The dollar fell to a 10.5 month low on Thursday, bolstering the appeal of gold. Reports from China also gave indication that the holiday season will foster more consumer interest in buying gold.

Overall, gold experienced a strong week and traders are looking forward to next week’s FOMC two-day meeting.

Oct 21

Price of Gold Weekly Recap – October 14-18, 2013

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Monday Open: $1,272.70
Weekly High: $1,324.80
Weekly Low: $1,253.50
Friday Close: $1,315.40

The reopening of the U.S. government this week was, perhaps counter-intuitively, good for gold. The end of the partial shutdown on Wednesday supported gold prices, since traders can look forward to Congress revisiting the debt ceiling in a few months, meaning the U.S. economy is nowhere near recovered, and in fact will likely continue the Federal Reserve’s quantitative easing program until there is a more solid foundation underfoot.

Monday opened the week on a high note, rebounding from a drastic sell-off on Friday, which is now being touted by some analysts as market manipulation. The short rally on Monday kicked gold back up from a three-month low.

Tuesday lost some gains to short-term pullback yet gained some momentum because of anticipation of the debt ceiling cut off date, October 17. If the U.S. government would have been unable to reach an agreement about raising the debt ceiling, the country would have defaulted on some loans and had the credit rating downscored.

Luckily, Congress and the Senate were able to pass a budget by Wednesday night, effectively reopening government’s doors by Thursday. The effects of this decision on the price of gold hit full stride Thursday morning as traders rejoined the market. The thinking is that because the two parties still do not see eye to eye, there may be another incident like this in a few months, and the Fed will certainly not be raising interest rates in such an unstable climate. Also, because the government had been on hold for 16 days, no economic reports had been released in that time, so traders are awaiting the state of the economy. The dollar slipped and fell, as well, during all this talk of devaluation, another bullish factor for gold.

By Thursday, some of those gains were lost to short-term traders exiting the market. Friday followed suit and maintained a steady range into the weekend.

Oct 14

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

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Monday Open: $1,324.50
Weekly High: $1,328.30
Weekly Low: $1,266.70
Friday Close: $1,270.70

Despite the continuation of the U.S. government’s second week of partial shut down, gold did not rally as a safe heaven and instead hit a one-week low. There is a significant amount of anxiety and tension in the marketplace right now over the U.S. government’s inability to pass a budget, and even more tension surrounding the looming debt ceiling negotiations. Analysts say that gold is not acting like a hedge fund because of its bad run the last few months, but if the U.S. defaults on its loans, which is what will happen if a budget is not passed and the debt ceiling ignored, then the U.S. credit ranking will take another hit and the yellow metal will then see more activity.

Monday opened the week fairly stable and continued to operate in a narrow price range into Tuesday. The Republican stronghold and Democratic balking seemed to heighten this week, with each party digging in their heels even more than last. The price of gold did not respond too much to this uncertainty, as there is not yet panic in the marketplace. Russian President Putin and German Bundesbank both warned the U.S. that a continuation of the debt ceiling dilemma will soon start to affect other world economies.

The new Federal Reserve nomination was announced Wednesday, to no one’s surprise. Obama will be aiming to put Janet Yellen in place as the next Chief of the Fed to replace Ben Bernanke in 2014. This is seen as generally bullish for gold, since Yellen, who has served as Vice President of the Fed since 2010, supports quantitative easing programs like Bernanke. However, the news did not move the market.

The end of the week saw prices dip from their general holding pattern. Risk-on attitudes and sell-stops on Friday contributed to the decline. The lack of economic data released in the past week put a halt to a lot of trading, including gold, though Obama and the Republicans seem to be close to signing a six-week long extension on the debt ceiling to pass a budget.

Sep 30

Price of Gold Weekly Recap – September 23-27, 2013

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Monday Open: $1,325.30
Weekly High: $1,340.30
Weekly Low: $1,307.40
Friday Close: $1,336.30

After last week’s short-lived rally, gold spun its wheels a little bit on uncertain U.S. economic forecasts and an uneventful world marketplace. The ups and downs were slight and no major news entered the radar of gold, but trading is once again taking on a bearish light.

Monday saw the week open on technical selling pressure from last week’s gains and a continuation of the conversation about when the Fed really will begin its bond tapering program. Similarly, the U.S. debt ceiling debate could be bearish for gold in the coming weeks. Germany re-elected Chancellor Angela Merkel to a third term, which could indicate further economic stability in the region, another bearish factor for gold. Meanwhile, China reported strong economic growth, also bearish for gold.

Tuesday morning New York Fed President William Dudley told CNBC that the Fed could begin its bond tapering program by the end of 2013 and conclude quantitative easing by 2014.

Wednesday saw positive mixed economic data come out of the U.S., including new residential home sales at a high, though Thursday’s reports were a mixed bag. Weekly jobless claims were lower, while GDP for the third quarter was weaker than expected. More “Fed speak” this week included Richmond Fed President Jeffrey Lacker announcing that he supports bond tapering and is surprised it has not already begun.

By Friday, the U.S. debt ceiling issue had gained some momentum, with the U.S. government aimed to partially shut down the next week if Congress does not pass a budget.

Sep 23

Price of Gold Weekly Recap – September 16-20, 2013

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Monday Open: $1,317.60
Weekly High: $1,371.20
Weekly Low: $1,293.50
Friday Close: $1,325.50

Gold prices responded to one major factor in the economic marketplace this week: the Federal Reserve announcing it will not start pulling back its loose monetary policy quite yet. The news was announced on Wednesday afternoon, to which the gold market responded by gaining 4.4% almost immediately. The rest of the American stock market responded positively as well, with the Dow Jones Industrial Average adding a quick 100 points during the feverish trading window.

The week started out low, however, with gold on the decline Monday and Tuesday, drawn down in response to some positive U.S. economic factors. The cost of living was reported to have risen less than expected, and the Consumer Price Index reported less-than-expected growth. Tuesday prices ended low on anticipation of the Fed’s address on Wednesday.

Wednesday’s spike bled into Thursday as traders were still digesting the news that the Fed will still continue to pour money into the market through their stimulus program. However, gold lost nearly all its gains from the week on Friday when St. Louis Fed President James Bullard made a statement saying that it could be as soon as October that the tapering program begins. Gold lost 2.8% to close the week slightly higher than it began.

Sep 16

Price of Gold Weekly Recap – September 9-13, 2013

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Monday Open: $1,386.60
Weekly High: $1,387.40
Weekly Low: $1,308.00
Friday Close: $1,323.40

Syria and the Federal Reserve were the two main factors influencing the gold market this week, and both can account for the week’s steady decline. After last week’s ramp up in the gold market due to increased pressure about a possible U.S. military strike on Syria, this week followed with de-escalation of the conflict, and therefore a drop in the safe haven demand of gold.

Monday began this steady decline when Secretary of State John Kerry announced the U.S. will be exploring a diplomatic agreement with Russia to eliminate Syria’s store of chemical weapons, thereby avoiding any warfare. Tuesday reached a three-week low on continued speculation about Syria.

The beginning of the week’s drop in prices was also influenced by continued talk that the Federal Reserve will start its tapering program soon. Gold has dropped 17% in 2013 so far after a decade of gains, largely due to an improved U.S. economy, and some analysts believe this trend will continue throughout the rest of the year.

By Wednesday, the price of gold had dropped to $1,363 by lunchtime due to the Assad regime in Syria accepting Russia’s nonviolent plan to disarm the country of chemical weapons in order to avoid a U.S. airstrike. With the Syrian crisis all but over, gold prices continued to plummet.

Thursday saw gold hit a fresh four-week low on improved jobs claims reports in the U.S. and anticipation of next week’s FOMC meeting, in which many expect the Federal Reserve to announce the end of its loose monetary policy. Friday continued this train of thought, and the week ended only slightly above the $1,300 mark.