Monthly Archives: July 2012
Gold futures edge up after BOJ comments
July 10 (MarketWatch) — Gold futures turned higher Tuesday after the Bank of Japan said it will up its asset purchases to help beat deflation, and as the euro rose against the dollar.
The metal rose after Bank of Japan Governor Masaaki Shirakawa said the bank was implementing “strong monetary easing steps, such as its near-zero interest rate policy and asset purchases in order to overcome deflation,” in comments while attending a government meeting.
Shirakawa said the central bank has accumulated up to ¥54 trillion ($681 billion) of asset purchases so far, but is aiming for ¥70 trillion. And through the accumulation of another ¥16 trillion in assets, “we believe the impact of monetary easing will be further enhanced,” he was quoted as saying.
“Banks are now starting to pick up gold, given the amount of monetary stimulus pumped in across various economies across world,” said Michael Hewson, senior market analyst at CMC Markets. “They’re trying to mitigate currency exposure and currency depreciation.
“If you take the view the Fed is going to print more money, it would make sense for central banks to hold more gold,” said Hewson. “It’s the only thing you can’t manipulate print or devalue.”
Gold Price Steady, Eyes Upcoming Euro Meetings, Fed Minutes
July 9 (IBT Times) — The gold price held steady near $1,585 per ounce on Monday as the yellow metal consolidated following last week’s 0.9% decline. The price of gold stabilized alongside the U.S. Dollar Index this morning, which inched lower by 0.1% to 83.292. In recent weeks, gold prices have fallen back toward the midpoint of the $1,540-$1,620 trading range that they have occupied since early May.
Last Friday the gold price fell over $20 despite the worse than expected U.S. employment report. While the non-farm payrolls data came in below economists’ estimates, the general consensus among investors was that the jobs report was not disappointing enough to meaningfully increase the odds of a third round of quantitative easing (QE3) by the Federal Reserve.
While the United States’ central bank may not be implementing further easing measures in the near future, several others around the world announced additional monetary stimulus programs last week. This past Thursday, the Peoples’ Bank of China (PBOC) unexpectedly cut interest rates, the Bank of England expanded its quantitative easing program by 50 billion pounds, and the European Central Bank (ECB) reduced its benchmark interest rate to a new record-low of 0.75%.
Looking to the week ahead, the U.S. economic calendar is relatively light, but does include a few key items. The Fed minutes – a recap of the latest Federal Open Market Committee (FOMC) meeting – will be released on Wednesday afternoon, followed by weekly jobless claims on Thursday. The week then concludes on Friday with reports on the Producer Price Index (PPI) and University of Michigan Consumer Sentiment Index.