Rarely have two words – or failure mentioned – this impact. For gold investors, who are they prepared themselves for a new round of” quantitative easing”, came Ben Bernanke studied to avoid these two words come up in the last week a huge disappointment. Within hours of the interview with the President of the Federal Reserve gold prices tumbled $ 100 per ounce approximately.
Move the landing, which amounted to 5 per cent, the biggest decline on more than three years, re-evaluation of nerve of the metal precious among some investors are wondering: What is the extent to which owned the basics of market power if not to exile by the President of the Federal Reserve such an effect life?
Continued tremor nervousness during the week, and gold falling below the moving average over 200 days, and this is a technical indicator that traders are watching very carefully, the first time since mid-January (January), which comes into contact with the low price was 1664 dollars per ounce.
Said James Steel, precious metals strategist at HSBC in New York:” When things return to normal, we will return to consider a request to display ornaments and mines. At the present time, the policy of the Federal Reserve severe impact in determining the price of gold. ‘
Bernanke and the role of rapporteur to the speed of movement in the gold markets is not new. In August (August 2008) helped his side on the tip of a second round of quantitative easing on the high price of gold 15 per cent during the four months that followed. Also gave promise of the Federal Reserve in August of last year to keep interest rates low for another two years, the momentum for gold to reach a record which stood at 1920 dollars an ounce in September. However, the extent of decline in the price of gold the recent and continuing decline surprised many investors and analysts. In fact, Bernanke did not rule out a third round of ‘quantitative easing’, but simply to avoid the reference to it.
According to Tom Kendall, precious metals strategist at Credit Suisse:” There are hints that interest rates at zero bound is no longer enough to make the price of gold moves up. Therefore there is a desire for more quantitative easing. ‘
This causes a problem with the optimists in the rise of gold, because the data recovery U.S. economy reduces the likelihood of a third round of quantitative easing.
The work of a large sell order one to exacerbate the sharp decline experienced by the price of gold. Traders believe that a large hedge fund was behind the sale. Even more important, however, is that the falling price of gold revealed the lack of interest in metal on the part of some of the most important supporters. While the increased concentration of investors in gold futures contracts with Comey to the highest level in five months, bankers say hedge funds have remained outside the major markets this year, even with the achievement of investor interest in the metal level is high. Edel Tlli notes, precious metals strategy at UBS,” the existence of frequency in the installation of any trading strategy. ‘
In addition, the physical gold market was quiet. In spite of the low price that finally caused some interest in moving, the demand from India and China – countries top the actual consumption of gold – has been slow this year, according to traders. According Tlli ‘market has become stressful. Demand for physical gold is extremely quiet. ‘For all these reasons, we find that a small number of investors have given up their point of view the optimistic, long-term, about the gold. Why is this? It’s all about the Fed.
Succeeded the Fed’s actions to combat the fire of the financial crisis – interest rates fall to zero, and the launch of two rounds of quantitative easing – in pay inflation-adjusted interest rates to record low levels in the United States.
Notes Jeffrey Curry, head of commodities research at Goldman Sachs, noted that real interest rates in the United States, which is measured by how U.S. Treasury inflation-protected maturing after ten years, it has historically been trading under a strong correlation with gold.
And this correlation broke down in recent months. Curry said:” are pricing in financial markets in an environment to facilitate the quantitative very different from the price of gold at the moment. Gold resident already undervalued relative to the Osasyate, and therefore not in need of further quantitative easing to lift its price. ‘ And strengthen this hypothesis is optimistic move the Fed in January (January) to extend his pledge to keep interest rates as they are until late 2014.
It is believed by many analysts and investors that the irreversible transformation to the tightening of monetary policy by the Fed will see the end of the high price of gold continued for a decade, and ascended from less than $ 300 per ounce in 2000 to about two thousand dollars in the last year. And his promise to keep interest rates at a level zero until the year 2014, the Federal Reserve to pay the price of gold to back down from its peak, which is expected by many analysts to occur in late 2012 or early 2013. Says Philip Clabojk, Chief, Division of gold in the analysis of Thomson Reuters GFMS, which is a consulting firm prominent in the field of metals:” The consensus within the Fed to extend the policy of zero interest rates until after 2013, implies, if other things remain the same , to extend the bullish gold market. ‘ And approved in specialist went to a large hedge fund that” a third round of quantitative easing could have an impact in the short term”. He adds:” The most important is that interest rates remain unchanged, I do not think this will change. ‘