News Header

 

Gold Higher as Central Banks Boost Liquidity

Release Date: 
Wednesday, November 30, 2011

The Federal Reserve, the European Central Bank and four other central banks jointly cut the cost of U.S. dollar-swap arrangements by fifty basis points in efforts to increase global liquidity. "This has alleviated any concerns of any banks having year-end liquidity problems," said analysts at TD Securities.

Gold prices surged on the news with the precious metal trading at $1746.00 per ounce on the New York Spot Market as of 7:21 a.m. Pacific Time, up $29.60 per ounce, or 1.73%. "We've had a pretty powerful move up, very quickly in a very short space of time. It's interesting that the greatest impact is on gold though…it's quite one-dimensional," said James Steel, precious-metals analyst with HSBC in New York.

The central bank actions weakened the dollar and lifted the euro to a one-week high against the greenback, supporting a rise in gold prices. "The euro has been weak and gold has a positive relationship with the euro," said Mr. Steel. Until today's strong price move, "that's really what's held gold from being able to go higher," he noted.

Several analysts were still pessimistic about prospects for a Euro-zone recovery despite the actions by the central banks. "Europe is still looking like it's probably heading for a recession next year, and that issue is not going away," said David Wilson, director of metals research and strategy at Citi.

"We still think there's an enormous amount of skepticism; that people don't think that Europe is going to deliver," said Rob Ryan, FX strategist at BNP Paribas in Singapore.

(Sources: "Gold Rallies on Central Bank Coordination," Wall Street Journal, November 30, 2011; "PRECIOUS-Gold rises after central banks' liquidity drive," Reuters, November 30, 2011)

News Footer

 

†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

You should review Goldine's Account Agreement along with our risk disclosure booklet, Coin Facts for Investors and Collectors to Consider ®, prior to making your purchase. Goldline has a spread or price difference between our selling price, called the "ask", and our buy-back price, called the "bid". That spread varies depending on coin or bar you acquire. Spreads on 1 oz bullion coins, 90% silver dimes and quarters, and one ounce and larger bullion bars are 13%. All other coins have a spread of 28%. There is also a 1% liquidation fee when you sell your coins back to Goldline. The market must go up enough to overcome this spread before an actual profit is achieved. Precious metals and rare coins can increase or decrease in value. Past performance does not guarantee future results. Coins are a long-term, three- to five-year, preferably five- to ten-year investment. We believe precious metals are suitable for 5% to 20% of the average investment portfolio though others may recommend a different percentage.

To receive free information package on gold and precious metals investing, call Goldline at 1-800-963-9798.