Tag Archives: bank of japan

Jun 17

Price of Gold Weekly Recap – June 10-14, 2013

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Monday Open: $1,385.10
Weekly High: $1,394.50
Weekly Low: $1,368.10
Friday Close: $1,390.60

The price of gold was characterized this week by fluctuating economic news from various world markets. A few key moves were bullish for gold, while others reinforced the bearish streak to end the week without much drastic movement.

Monday began on bullish anticipation that China’s decision to buy two gold-backed exchange-traded products (ETFs) would push up demand for the yellow metal. China was the second largest consumer of gold in 2012 worldwide, so analysts expect this is a good thing for long-term gold prospects, however, we should not expect a huge rally in the near future. China’s ETF buy, rather, provides some stability for the continuation of gold demand.

Also, Standard & Poors upgraded the U.S. credit ranking to stable from previously negative on Monday morning, which boosted the dollar short-term, but did not have a wide effect on gold. China released some raw economic data that was weaker than expected, a subtle bearish factor for the raw commodities.

The Bank of Japan was the big catalyst for Tuesday’s loss, spurring some trading out of the market overnight. The bank decided not to expand its current quantitative easing program, as some had hoped, which pulled gold prices down. However, Bank Governor Haruhiko Kuroda said they might consider it again if their borrowing costs go up.

Wednesday morning was trading in the same ballpark as Tuesday, but saw some gains by the evening. It was a quieter trading day Wednesday, with the “risk-off” mentality making way for some technical short covering later in the day, as a weaker dollar incurred some buying back into gold.

Thursday was a day of speculation, as Japanese stock markets showed some losses and analysts worried whether this would spill over into U.S. trading. Even though gold generally acts as a safe haven during these situations, this week it was carried more heavily by a risk aversion mentality. Currently, economic turmoil is not tense enough to prompt a large shift back into gold.

Friday urged gold a little north as President Obama issued a statement that the U.S. will provide arms to Syrian rebels. This news encouraged traders to think about the possibility of escalation in an already war torn country, which did move some back into the safe haven of gold, ending the week slightly higher than it began.

The marketplace will be anticipating an address from the FOMC next Wednesday.

May 20

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

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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.

Apr 15

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

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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.

Jan 28

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

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Monday Open: $1,690.00
Weekly High: $1,695.40
Weekly Low: $1,657.40
Friday Close: $1,659.20

Though lacking significant external selling pressures this week, gold nonetheless took a $30 loss to break the upward trend that was characteristic of the beginning of the year. The price drop can be generally attributed to global economic improvements that are projected to continue throughout 2013, lessening interest in gold as a safe haven.

Monday opened slow and steady as trading was quiet for the Martin Luther King, Jr. holiday. Tuesday was also fairly steady, despite bullish news for gold from Japan. The Bank of Japan announced a quantitative easing program that would raise its inflation aim from 1% to 2%. Amidst this news, the U.S. dollar fell against the yen by 1.2%, but this didn’t make much impact on gold.

Wednesday’s global economic reports caused a drop in gold. The European Union reported positive growth for January, and a Reuters poll projects overall world economic growth based on a recovering Asian economy. With major industrialized countries showing economic recovery, gold hasn’t necessarily lost its sheen, but it may be downplayed as a safe haven investment in the coming weeks. Citibank downgraded its projection for gold on Monday by 4.2% to $1,653 per ounce for 2014.

Thursday dropped gold back to a mid-December trading range, 13% below the highest the yellow metal ever reached in 2011 – $1,923 per ounce. Thursday’s decline may just be a continuation of the previous days positive global economic growth reports. Friday continued to descend to end the week with a two-week low.

However, all expectations for gold are not lost; they seem to just be paused.  While most analysts expect to see slow movement for gold in the next few weeks, ScotiaMocatta, a global trading company, highlights the big picture by saying in a report, “The financial system is drowning in debt and there seems no end in sight to ongoing massive budget deficits.  Confidence in the financial system and in the fiat government paper that facilitates it will remain low.” Next week, the FOMC will meet again, but no monetary policy change is expected.

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.