Tag Archives: Federal Reserve

Jun 03

Price of Gold Weekly Recap – May 27-31, 2013

Posted on by

Monday Open: $1,394.50
Weekly High: $1,420.70
Weekly Low: $1,379.30
Friday Close: $1,385.50

The price of gold posted its 7th monthly decline in 8 months this week. Gold has always been volatile, but it seems as if this losing streak isn’t going to skyrocket upwards anytime soon.

Monday was a fairly complacent day, but Tuesday experienced some losses against the strong U.S. dollar. However, the losses were minimal for gold as compared with the relatively high place of the greenback, which is a good sign for gold.

Wednesday saw the yellow metal make some gains as the dollar dropped. U.S. Treasury bonds are rising in price this week, hitting the highest in a year, which is a sign of a recovering economy and increased likelihood that the Federal Reserve will soon start to change its loose monetary policy, a prospect that has been on the gold horizon for many months now.

Thursday saw gold continue its upward climb as Asian stock markets declined and sent some people back to the safe haven of gold. Thursday marked a fresh 2-week high for gold, but declined again on Friday on a technical correction. European stock markets reported high unemployment, the U.S. dollar index was firm, and the market place awaited economic data from China on Saturday. Also, the wedding season in India is now over, reducing demand for physical gold.

 

May 27

Price of Gold Weekly Recap – May 20-24, 2013

Posted on by

Monday Open: $1,393.70
Weekly High: $1,398.30
Weekly Low: $1,360.70
Friday Close: $1,383.90

Still prevalent on gold investors’ radar is how the Federal Reserve may be scaling back their quantitative easing program. This concern factored heavily into the ups and downs of the yellow metal this week.

Monday opened fairly higher to correct the seven-day loss streak from the previous week. Midday Moody’s announced that if the U.S. could not correct its budget and deficit problems by the end of 2013, the credit rating agency may downgrade its credit rating. Gold sparked higher at about this time.

Tuesday saw gold move up past its initial morning low after Federal Reserve at St. Louis President James Bullard announced his recommendation that the FOMC should not completely cut its bond-buying program and instead scale it back if need be. There have been indications from the Federal Reserve that this year may be the end of its quantitative easing (QE3) program, which would be dramatically bearish for gold.

Fed Chairman Ben Bernanke made an announcement on this point on Wednesday, perhaps confusedly remarking to both sides. He stated that he was still fully in favor of the QE3 program, but later answered a question to the effect that the next few months may see a tapering of policies. The gold market responded more strongly to the latter statement, dropping down to the week’s low.

With the low price from Wednesday, Thursday saw traders selling off in risk aversion, as well as a resurgence of safe haven buying. Friday trading was quiet, perhaps in anticipation of the U.S. Memorial Day weekend.

May 20

Price of Gold Weekly Recap – May 13-17, 2013

Posted on by

Monday Open: $1,430.80
Weekly High: $1,430.80
Weekly Low: $1,372.30
Friday Close: $1,382.60

Gold experienced one of its worst losing streaks this week, breaking below the $1,400 barrier. The main reason for gold’s losses this week include a generally recovering world economy, specifically a steadily gaining dollar and record stock market highs, as well as indications from the Federal Reserve that the low interest rate policies will be slowly “tapering” out, as is the new buzz word around that topic.

Monday’s opening price of $1,430 was in fact the week’s high. This week marked the longest streak of price decline in four years, while the dollar is experiencing a 9.5 month high. This gold-dollar relationship is one key factor in the drop in gold. The greenback hit a strong stride this week in international affairs, gaining momentum as a more desirable investment than precious metals. The U.S. and Japanese stock markets are hitting significant (record or multi-year) highs, which moves investors away from safe haven assets.

On Wednesday, gold slipped below the psychological threshold of $1,400. Tuesday’s sell offs triggered some automatic sell-stops, and these continued through the rest of the week. There was no particular event or external factor that pushed the yellow metal through this barrier, but rather the continued selling pressure it has already been experiencing.

Another factor that is pushing the price point down is the anticipation of the Federal Reserve to gradually increase interest rates and pull back their quantitative easing program. The Wall Street Journal released a report Friday that confirmed Ben Bernanke and Fed officials have decided upon a strategy to slowly wind down the easy monetary policies. This has been on the horizon for a while, and sources indicate that 2013 will be the year that ends the 0% interest rates and bond-buying programs, or at least slows them down, which would be all around bearish for gold.

On Thursday, San Francisco Federal Reserve Bank President John Williams publicly expressed his tapering of the easy monetary policy. Friday closed the market with a seven-day losing streak and a 4-week low.

However, for all the downsliding in the gold market lately, there is still some demand for physical gold in India and China, especially jewelry, bars and coins.

May 06

Price of Gold Weekly Recap – April 29-May 3, 2013

Posted on by

Monday Open: $1,468.10
Weekly High: $1,482.30
Weekly Low: $1,440.90
Friday Close: $1,469.40

Gold rebounded somewhat to the nearly $1,500 level this week as economic matters returned to center stage and fresh interest in gold returned. Monday opened with a 1% gain since Friday on a falling dollar. Tuesday was up and down but ended higher on bargain hunting and the declining dollar. U.S. economic reports issued on Tuesday were a mixed bag, but not conclusively positive, spurring more interest back to precious metals.

The big news of the week was the Federal Reserve meeting on Wednesday. Gold dropped sharply in anticipation, but bounced back up after the FOMC announced that they were going to maintain both zero percent interest rates and the $85 billion per month bond buying program until the economy picks up. There are no indications from economic data that unemployment will drop anytime soon, and many March reports were weaker than expected. The Fed also made no mention, as previously alluded to, of a near end in sight for their economic policies. These are all bullish factors for gold.

Thursday showed steady gains as traders picked back into the market, and the European Central Bank lowered its interest rates from 0.5% to 0.25%. The Euro zone is also experiencing slow economic growth. Friday’s gold prices slipped down back to near the week’s opening price on better-than-expected U.S. jobs reports. Unemployment dropped to 7.5% in April, the lowest in four years.

Apr 15

Price of Gold Weekly Recap – April 8-12, 2013

Posted on by

Monday Open: $1,572.70
Weekly High: $1,587.20
Weekly Low: $1,488.30
Friday Close: $1,488.30

Monday opened this week on a strong foundation, but headed toward a drastic 15-month low by the end of the week. The beginning of week floated goal at a pretty steady level, solid from last Friday’s lower-than-expected U.S. economic reports, as well as stimulus reports issued by the Bank of Japan and the still-weak European economy. North Korea is still a wild card and having mild effects on the market.

Tuesday experienced virtually no change in the price of gold, as the market waited for fresh external factors to influence any price changes. There were a few bargain hungers entering the market, but most of the day was spent in anticipation of the Federal Reserve’s minutes on Wednesday.

On Wednesday, gold investors were speculating about how the Fed would handle the recent dips in economic progression, suspecting that the easy monetary policies would remain unchanged. The report was released to the slight dismay of gold bugs; it was slightly bearish because it revealed that the Fed was debating internally when to end the current policies, which means stricter rates may be very near on the horizon. Gold took a dip for it.

Thursday rebound as new blood entered the market after Wednesday’s sharp exodus. The market price of gold stayed fairly level, but news issued by Philadelphia Federal Reserve President Charles Plosser may have had an impact on the severe price drop that occurred on Friday. Though not a voting member of the Federal Reserve, Plosser issued a statement that the Fed would be changing its policies by the end of the year. Concurrently, the dollar and the Japanese stock market hit a high, which is also bearish for gold.

The reason for Friday’s dramatic slip in price was the automatic triggering of stop-losses when the price of gold reached below last week’s strong $1,539 levels. No external factors were the cause of the new 15-month low. It is a trend that has been occurring lately: traders are setting reference points to get out of the gold market, causing increasing downfalls in the selling price.

Apr 08

Price of Gold Weekly Recap – April 1-5, 2013

Posted on by

Monday Open: $1,598.80
Weekly High: $1,602.70
Weekly Low: $1,542.80
Friday Close: $1,579.70

Despite continuing turmoil in North Korea and a few other global economic factors that might boost the price of gold as a safe haven, the yellow metal didn’t fare well this week. By mid-week, gold had hit a 10-month low, but gained enough to close the week in the $1,550 to $1,600 range.

Monday was a slow trading day due to the Easter holiday, but gold still took a modest gain from a weak dollar index and some safe-haven buying in response to the escalating conflicts in North Korea. The U.S. also released some economic reports from the manufacturing industry on Monday, which were lower than expected, also adding to the slight gains.

By Tuesday, however, the price of gold started to deteriorate and continued to plunge through Wednesday. No significant external price factors caused this tanking; heavy chart-based selling and automatic sell stop orders accounted for the sudden shift. General economic gains across the developed world may have a long-term impact on the lessening of interest in gold. Surprisingly, conflict in North Korea has not led to droves of demand for the safety of gold. Wednesday’s price point was a fresh 10-month low.

Thursday remained primarily unchanged, though a weaker dollar index pushed the price up to keep it around a level $1,555. Gold traders are tending to sell of their Exchange Traded Funds (ETFs) in the gold market, according to reports on the first quarter of 2013. However, some bargain hunters are also entering the market to pick up physical gold.

Gold took a slight boost on Friday as weak U.S. employment data hit the news stands, indicating that the Federal Reserve will most likely not change their loose monetary policies anytime soon. The week’s dip in prices is also leading to increased interested in physical gold, especially in India and China.

Mar 25

Price of Gold Weekly Recap – March 18-22, 2013

Posted on by

Monday Open: $1,605.80
Weekly High: $1,615.90
Weekly Low: $1,604.60
Friday Close: $1,607.90

Gold stayed in a fairly limited trading range this week, but exhibited holding strength amidst some economic woes in the European Union. It was an overall good week for gold bugs, with a few new price highs and a slight advantage by Friday.

Monday started out fairly slow, trading above the $1,600 level and marking a fresh 3-week high. News in Cyprus has brought the European sovereign debt crisis back to the forefront of the global stage. The Cyprus government has decided to tax savings account plans in their domestic banks as a way to resolve some of their debt with the European Central Bank and International Monetary Fund. In addition to angering Cyprus residents, this move has sparked fears throughout the rest of Europe that other countries will soon follow suit. This crisis is bullish for gold as traders see the precious metal as a safe haven to unstable economies. Monday made modest gains.

Tuesday continued to send gold upwards to a new 3-week high, as the Cyprus situation increased safe-haven demand. Cyprus banks were closed this week as the government reconsiders the tax plan.

Wednesday brought the week’s anticipated Federal Reserve statements. As expected, the Fed is making no changes to their current monetary policy, but due to previous meetings and tentative indications of change, some analysts believe the Fed is subtly inching toward revving up interest rates as the economy improves. The FOMC meeting notes were modestly bearish and Wednesday closed lower.

Thursday saw gold prices hit the week’s third fresh 3-week high. The risk-off trading from Wednesday rebalanced as others saw the chance to jump in the market. As Cyprus’s crisis continues, gold maintains a steady rhythm of safe haven demand. More weak European Union economic data came out Thursday, prompting the hedge fund attitude even more, and the world is now watching North Korea, as the country has made threats to Japan. Crisis in this realm of the world could also send more people to take refuge in gold.

Friday dropped a little on profit taking, but ended the week a little higher than it began. The Cyprus questions continue into next week.

Mar 11

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

Posted on by

Monday Open: $1,574.60
Weekly High: $1,584.50
Weekly Low: $1,566.30
Friday Close: $1,578.10

Gold experienced some modest ups and downs this week, but nothing occurred to dramatically alter the price bracket, so the yellow metal ended the week nearly the same as it began.

Monday opened pretty flat, trading around a solid $1,575. Strong economic news from China and steady gold demand continued through to Tuesday, when fresh economic stimulus measures were announced to boost the economy up to a targeted 7.5% GDP. This is a bullish factor for the raw commodity sector, as well as stocks worldwide. However, the price gain was kept in check by the news that the Dow Jones Industrial Average hit a new all-time record high, which drew interest toward riskier endeavors and away from safe haven investments like gold.

Wednesday saw some gains after the Federal Reserve released news that their economic reports only show moderate to modest economic growth, not enough to put a halt to the aggressively low monetary rates that are currently in place. Gold bugs are delighted on this news because loose Fed policy helps keep gold relevant as a hedge fund.

Thursday held on pretty steadily, with some impetus in trading from a lower U.S. dollar and some positive economic developments in Europe. Mostly, though, traders were awaiting Friday’s employment reports for the month of February.

The sharp dip in prices on Friday was indeed due to Friday’s morning reports of better-than-expected jobs growth and declining unemployment rates. Friday hit a fresh two-week low, but quickly rebounded on short-term bargain hunting and opportunist market-seeking to close the week slightly higher than it began.

Mar 04

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

Posted on by

Monday Open: $1,593.60
Weekly High: $1,615.80
Weekly Low: $1,567.40
Friday Close: $1,575.90

After last week’s abysmal returns for gold, this week started off faring a little better as short-term investors swooped up the advantages of the low price of gold over the weekend. Monday opened very near the $1,600 mark, rose a little above it early in the week, but ended lower again. There was also some global news that was positive for gold on Monday, including more gold purchases in Russia, a lowered debt status for the UK and a monetary easing program in Japan.

Tuesday was the best day for gold this year so far. The yellow metal enjoyed 2% gains after a speech by Federal Reserve Chairman Ben Bernanke, in which he further reinforced his support for the current quantitative easing programs. There had been talk in the past few weeks of rethinking the low interest rates and bond-buying programs, but his speech on Tuesday provided a much-needed sigh of relief for gold investors.

Right before gold spiked on Tuesday, Monday marked the day when Goldman Sachs predicted the end of gold’s 12 year winning streak. Mixed signals much? Predictions for gold are all over the place right now, as some gold bugs firmly believe gold is just experiencing a rough patch and will continue toward the $2,000 mark this year, while others are seeing a bleaker picture for the precious metal.

Another factor that had been contributing to gold’s rise early in the week was a gridlocked election in Italy that some suspected may cause financial unrest in the country. However, by Wednesday the situation had calmed down enough for those buyers to leave the gold market, causing a short drop in price. Profit-takers also dragged down the market as they collected wins from Tuesday.

Friday marked the first day of March, and reports came rolling in that showed gold in an unfavorable light. The last day of February marked the fifth straight month that gold has experienced monthly losses. Improved global economics are lessening strength in gold as a safe haven. The dollar was also stronger on Friday, pushing gold down even further.

Feb 25

Price of Gold Weekly Recap – February 18-22, 2013

Posted on by

Monday Open: $1,614.10
Weekly High: $1,615.50
Weekly Low: $1,556.90
Friday Close: $1,580.50

Gold whisked by the $1,550 mark on Wednesday, dropping 2% for the week to hit a fresh eight and a half month low. This week did not bring good tidings for gold bugs, as the yellow metal proved an 11% decrease already this year. A few factors contributed to this decline, including the projected improvement of major world economies, and, most notably, concerns that the Fed will drop its monetary easing policy, which would have a disastrous effect on gold.

Monday started the week off slow, maintaining a pretty level $1,610. Tuesday continued at a fairly steady pace above the $1,600 mark, as the dollar index continued to stay low. The lack of investor activity during the beginning of the week was largely due to anticipation of Wednesday’s Federal Reserve meeting.

Wednesday, the big news of the week struck as the Federal Reserve gave indication that they may change or halt their quantitative easing policies that have been a major source of gold’s soaring in the past three years. Gold has been volatile in the past year, and especially the last few months, recently because of expected improvements in the U.S. and European economies. Gold is seen as a hedge fund against failing currencies, however, the dollar has been strong recently, the European Union is on its way out of its sovereign debt crisis, and stock markets have been rallying worldwide, lessening safe haven interest in gold as investors stoke a riskier appetite.

So, on Wednesday, the Federal Reserve’s Open Market Committee released news that because of improved economic conditions, they may rethink their massive asset-purchasing program that has been in place and that was renewed in December. Gold, accordingly, suffered a major drop to hit a fresh 50-day moving average that is below its 200-day moving average. This, according to popular price analysis lingo, is dubbed a “death cross” because it usually signals an acceleration of price declines.

However, a Dow Jones report on Wednesday also revealed that a historical analysis of gold shows an exception to the “death cross” rule for gold; gold prices tend to rebound in the weeks and months after the ominous-sounding death cross. Also, investors may have overreacted to the Fed’s minutes, since the meeting’s proposal was inconclusive, Bernanke is a clear supporter of quantitative easing and the conversation is set to continue in March.

Thursday saw some short term recovering and a slight rise in prices, but Friday closed the week on a seven-month low.