Tag Archives: Ben Bernanke

Aug 05

Price of Gold Weekly Recap – July 29-August 2, 2013

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Monday Open: $1,328.70
Weekly High: $1,336.40
Weekly Low: $1,285.10
Friday Close: $1,307.90

The week began in anticipation of major economic news the rest of the week and a high opening statement on Monday. The dollar hit a five-week low on Monday, causing gold to start out on a slight upswing. Tuesday flipped the switch and gold endured modest losses as those outside markets turned bearish – the dollar rose and crude oil sank.

The first big news of the week occurred on Wednesday when the FOMC released their minutes and some key U.S. economic data came out. Wednesday’s price of gold took a slip from these two points, mainly the latter. U.S. gross domestic product for the second quarter reported higher-than-expected numbers, ranking at 1.7$ instead of 0.9%. The monthly ADP jobs report also showed gains, reporting 200,000 new jobs instead of the expected 180,000. The FOMC minutes were still accommodative to gold, with Chairman Ben Bernanke waiting on pushing the tapering program ahead. The new expected start date for the long-anticipated change to Federal Reserve monetary policy, which would be extremely bearish for gold, has been now circulating as around September.

Thursday regained some of those losses as Europe started off on some positive trading deals with the U.S. and gold traders were bolstered by the final closing statement from Bernanke that came out after the traing day had ended. There was no mention of any start date for the tapering program in this statement, a good sign for gold bugs.

Friday, however, undid all the gains of the week and slipped down below the $1,300 mark on very strong U.S. economic data. U.S. manufacturing data and jobless claims reports pushed gold down, further exacerbating worries that positive economic reports will influence an earlier decision by the FOMC.

Jul 22

Price of Gold Weekly Recap – July 15-19, 2013

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Monday Open: $1,283.10
Weekly High: $1,294.50
Weekly Low: $1,273.30
Friday Close: $1,294.90

The most dramatic shift in the price of gold happened this week on Wednesday, but no radical gains or losses were reported for the week overall.

Monday opened the week with short covering and bargain hunting to end the trading day slightly higher. Not too much global news impacted the prices early in the week, prices instead stagnating on anticipation of the Federal Reserve’s semi-annual address to the House of Representatives on Wednesday and Thursday.

Tuesday saw prices rise on increased stability of U.S. inflation pressures. Traders in the gold market banked on the expectation that the Fed wouldn’t start their bond tapering program as soon as previously expected. This theory is based on Chairman Ben Bernanke’s recent addresses, in which he has not indicated a certain time frame for ending the quantitative easing program.

Part of this is because the U.S. economy, though experiencing improvement, has not accelerated at a rate to deem higher interest rates appropriate quite yet. An unstable job market and low inflation are still the names of the game right now. Last week the gold market responded to the Fed’s slow movement with a 5% increase in prices.

True to expectations, Bernanke did not give any solid indication of when the tapering program might begin. Analysts are calling his address a wash, since no major changes are being made. The sharp drop on Wednesday can more be attributed to a high dollar and technical correction than to reactions to the Fed.

Thursday when Bernanke continued his address, the gold marketplace continued to report little to no reaction. Thursday ended a little higher from traders taking advantage of the brief price fall.

Friday was quiet overall, ending the week a few points higher than it began, pushed upward more by bullish outside markets than any major world news.

May 27

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

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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.

Mar 04

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

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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 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.

Sep 14

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

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Monday Open: $1,725.80
Weekly High: $1,777.10
Weekly Low: $1,724.80
Friday Close: $1,770.50

This week followed a bullish trend for gold since about a month ago when Federal Reserve Chairman Ben Bernanke gave solid indication he would instate quantitative easing. Gold bugs have been waiting for further news on monetary policy, and this week revealed the Fed’s plan to the delight of gold investors. After the doldrums of summer, during which gold started to dip below its previous holdings, gold is finally seeing a tremendous upsurge.

Last week gold hit a six month high, and this week saw gold shoot up another $30 to close just a third of the way below the $1,800 mark, a long way from when gold was hovering around $1,550 in the earlier summer months. Many believe $1,800 is just around the corner, and that 2012 could set the next record for gold’s highest price by catapulting it above $2,000.

Monday opened a bit softly after Friday’s reports of unemployment data and Fed expectations, but hit a solid stride mid-week and jumped drastically on Thursday after Bernanke finally revealed the Fed’s newest financial policies. The entire week, and month in fact, had been building up to Bernanke’s Thursday afternoon address at the third quarter FOMC meeting.

On Thursday, the Fed revealed its plan to spend $40 million buying mortgage-backed dept until employment improved and inflation remained contained. After months of uncertainty, the Fed has shifted focus from price stability of the dollar to boosting employment statistics. Also, the Fed stated it would probably not raise interest rates (which are at historical lows) until 2015, and Operation Twist is a key part of the policy, which retains that the Fed will buy longer-term securities as shorter-term ones mature.

To sum up, this means that inflation could be on the near horizon, and even the possibility of a weaker dollar encourages people to flee to the safety net of gold. After Thursday’s news, the price of gold rose 2%. This is the third round of quantitative easing enacted by the Fed since the recession began in 2008.

“The Fed’s inflationary behavior should be bearish for the dollar in the long run and drive investors to seek protection via the gold market,” Jeffrey Sherman said, who is the commodities portfolio manager of DoubleLine Capital, a company with more than $40 billion in assets.

Historical trends and the time of the season make it very possible that gold could rise to even higher, unprecedented heights. Chief Executive of Newmont Mining Corp., the world’s second largest gold producer, Richard O’Brien told participants at the Denver Gold Forum that $2,000 was just around the corner.

In related news, the Republican party has been calling attention to the possibility of returning the U.S. to a gold standard in recent weeks.