News Header

 

Growth Fears Fuel Speculation About Easing

Release Date: 
Monday, August 29, 2011

Concerns about the lagging economy led analysts to comment on future monetary policy in the wake of Fed Chair Ben Bernanke’s speech on Friday. His remarks left open the possibility of further monetary stimulus at the Fed’s September meeting, according to analysts at ANZ.

"Bernanke gave markets no hints that another liquidity injection was imminent," Ritesh Gandhi, an analyst at Mumbai-based investment bank Anand Rathi Group, said in a report. Buyers were "returning to the gold market in search of a refuge," Gandhi said. A second day has been added to the Federal Open Market Committee meeting next month for "a fuller discussion" of the economy and the Fed’s possible response, Bernanke said Aug. 26.

"An extra day of deliberations scheduled for the September FOMC meeting kept hope of another QE3 on the table," said ANZ Bank in a note. Speculation that more easing may yet be unveiled next month in the face of an uncertain growth outlook weighed on the dollar and helped lift European stocks.

Concerns about the sovereign-debt problems were brought back into focus on Saturday when the International Monetary Fund’s managing director, Christine Lagarde, said in Jackson Hole, Wyo., that the global economic recovery was "fragile" and warned of a "dangerous new phase."

"We believe gold is an insurance policy against a rising probability of worsening global systemic risks and the recent price decline provides a buying opportunity," Morgan Stanley analysts including Hussein Allidina wrote in a note.

"Gold recovered strongly after the wild swings during the week, and after a lot of weak longs were flushed out and with speculative long positions still being reduced, it has now got room to the upside," said Saxo Bank senior manager Ole Hansen.

(Sources:  "PRECIOUS-Gold softens but easing talk lifts prices from lows," Reuters, August 29, 2011; "Gold Advances on Wealth-Protection Demand After Bernanke Offers No Boost," Bloomberg, August 29, 2011; "Spot gold drifts lower, eyes $1,800/oz," MarketWatch, August 29, 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.