Browsing all articles tagged with bond buying
May
18

Gold Drop Further in Longest Losing Streak in Four Years

Precious metal knock down on Friday for a seventh straight session, in its greatest losing streak since March 2009 because the dollar strengthened and investors cut exposure to the gold fearing further drops and choosing equities instead.

Yellow metal has lost almost 6 percent of its value in the six sessions through Thursday as stocks added on the back of strong US economic statistics and on fears the Federal Reserve could end its bullion friendly bond buying program.

Spot gold was losing 0.34 percent at $1,380.91 per ounce by 0538 GMT, having plunge to a four-week low of $1,369.29 on Thursday as renewed liquidation in precious metal’s ETFs and a recent drop below the $1,400 per ounce level spooked investors.

The gold is down 17 percent for the year and is on track for its worst weekly turn down in a month. Holdings in SPDR Gold Trust, the world’s major gold-backed exchange-traded fund, knock down to their lowest in four years.

Traders and dealers said Physical demand was also quiet on Friday as consumers in the largest gold buyers, China and India, wait for prices to stabilize or fall further.

Brian Lan, managing director of GoldSilver Central Pte Ltd in Singapore said many people are waiting on the sidelines as they are expecting another fall.

Demand in India is being hurt by central bank curbs on gold imports. Limits on bank batch have hit supply and triggered a sharp jump in premiums.

Indian gold futures chop down 1.5 percent on Thursday, extending losses for a second straight session to their lowest level in almost a month in line with global markets.  Lan said buying in India had plunge considerably from Monday, which saw the celebration of Akshaya Tritiya, considered an auspicious day to buy metal.

Premiums for gold bars in Hong Kong the main supply of gold for China, strike record highs this week on supply constraints.

Yellow metal demand knock down 13 percent to a three year low of 963 tonnes in the first quarter because rising jewelery demand and strong appetite for coins and bars failed to offset a sharp fall in investment, the World Gold Council says.

SPDR said holdings knock down 0.55 percent to 1041.42 tonnes on Thursday, the weakest in four years.

US gold future for June delivery was down 0.52 percent at $1,379.70 per ounce.

Apr
29

Precious Gold Rises 1 percent, Holds near One Week High

Yellow metal rose more than 1 percent on Monday and held near its highest level in more than a week as a bounce back in prices from multi-year lows failed to control investor appetite for the gold’s, leading to a shortage in physical supply.

Current bleak US growth statistics that raised expectations the Federal Reserve will keep its current pace of bond buying at $85 billion a month also supported precious metal that is typically seen as a hedge against inflation.

However investors are still roiled by the very recent event of the tumble. The question is how supportable is this physical buying as at the same time, we are still seeing funds flowing out of yellow metal. Retail investors won’t be buying bullion in hundreds of millions of dollars like the funds.

Both cash gold and futures dropped to around $1,321 on April 16, their weakest in over two years, subsequently drop below $1,500 sparked a sell-off that encouraged investors to slash their holdings on exchange traded funds. They touched an 11 day high above $1,484 on Friday.

I don’t consider gold is out of the woods yet, however there’s room for upward correction. One of the reasons why precious metal has plunged so much was the strong signs of US economic recovery.

US gold futures which often give trading cues to cash metal, hit a high of $1,472.20 per ounce. By 0226 GMT, prices stood at $1,469.60 climbed $16.00. Spot gold gain $7.51 per ounce to $1,470.01.

Premiums for gold bars have jumped to multi-year highs in Asia as of strong demand from the physical market, which has led to a shortage in gold coins, bars, nuggets and other products.

In other markets, shares in Asia crept ahead on Monday however the US dollar lost ground to the yen as markets braced for a busy week for economic statistics and central bank policy meetings in the United States and euro zone.

Holdings on the biggest gold-backed exchange-traded-fund ETF, New York’s SPDR Gold Trust continue to drop, which was a sign investors have yet to reinstate their confidence in gold. The holdings are currently at their lowest since September 2009.

The current string of underwhelming statistics will strengthen the hand of the doves at the Fed and temper any talk of tapering back the bond buying programme. The policy setting Federal Open Market Committee will announce its decision at 1815 GMT on Wednesday.

Report by the Commodity Futures Trading Commission showed on Friday that yellow metal rallied to an 11-month high in October previous year after the Fed announced its third round of aggressive economic stimulus, raising fears the central bank’s money printing to buy assets would stoke inflation, money managers and Hedge funds trimmed their net longs in gold futures and options in the week to April 23 as investors reduced optimistic bets.

 

Apr
19

German Court to Hear Case Against ESM, ECB bond-buying in June

Germany’s Constitutional Court said on Friday that it would hold a public hearing on complaints against the euro zone’s bailout fund the European Stability Mechanism, and the European Central Bank’s bond buying program on June 11 and 12.

The seven complaints in total, reflect German unease regarding the mounting costs of dealing with the three year debt crisis and fears that the ECB bond buying program may violate the taboo against direct central bank financing of state budgets.

The court based in Karlsruhe southwestern Germany, ruled in a preliminary verdict previous September that the ESM did not violate German law and could go further on, while it insisted on veto rights for the German parliament.

The ECB has not yet trigger the program as struggling euro zone states, previously implementing tough austerity measures, are reluctant to recognize the onerous conditions of the program, however the pledge alone has been enough to bring down their borrowing costs over recent months.

Gunnar Beck, constitutional law expert said he did not expect Karlsruhe to support the complaints, given its precedent record on not blocking moves towards European integration, despite the legal worries over the bond buying program.

There is no doubt that the EU contract, rule out bond purchases whenever they might facilitate state financing through the printing press and permit indebted states to obtain enhanced rates than they would otherwise.

There is no significant precedent where the German constitutional court has directly challenged the German government over an issue of European policy.

He added, I have no doubt the court will present to the government’s wishes in one form or another when it comes to the ECB bond purchases.

Political analysts say a decision is unlikely earlier than Germany’s September election when Chancellor Angela Merkel, her popularity enhanced by what voters see as her competent handling of the euro zone crisis is expected to win a third four year term.

Mar
28

Federal Reserve Doves In No Rush To Scale Back Asset Purchases

Primary supporters of the Fed’s bond buying program are not rushing to scale back the swiftness of purchases as the job market improves.

Charles Evans, the president of the Chicago Federal Reserve Bank and a leading architect of the Fed’s specially loose policy, advice a go-slow approach to making any alteration to the $85 billion per month purchases of mortgage and Treasury’s backed securities.

Charles Evans further said that he assumed this is the summit where we have to be patient and let our policies work.

He further said that he prefer and suppose it is best that we carry on to provide strong confidence that we are going to be doing appropriate accommodative policies to get the economy going another time.

Fed will have to have assured that the economy was on solid footing in the second half of the year prior to changing policy. That could simply mean that we require to work our way through the second half prior to we have sufficient confidence that growth is strong enough.

Some other Fed officials are excited for the Fed to diminish the asset purchases. A few believe the Fed should start narrowing as soon as possible.

The Fed is currently buying $40 billion of mortgage-backed securities and $45 billion in long-term Treasury’s per month. Following a two day conference previous week, Ben Bernanke, Fed Chairman said that the Fed wanted to be convinced that current improvement in the labor market was sustainable prior to imitating the purchases.

William Dudley, the president of the New York Fed said that he expected the fed would ultimately scale back the speed of the purchases.

Although Evans argued that the asset purchases were helping the economy. He can not perceive that those are the bound for doing less.  He want to be really careful regarding the signal that reducing bond buying would be.

Evans stated that he was open-minded and a couple of months of job growth above 300,000 would get his concentration and in February, 236,000 jobs were created.

Mar
11

Gold Rebound from 2 week Low as Stimulus Perceived Continuing

Federal Reserve incentives perceived to run through 2013 despite optimistic jobs statistics. Spot gold float in the range between $1,564 to $1,586.90 per ounce.

Precious metal climbed up during the Monday’s trading session, dragging off a two week low strike in the last session on  greater than expected US jobs statistics, as the Fed’s is likely to keep support the economy with monetary incentive through 2013, also providing support to the precious metal.

US employers added better than expected 236,000 workers to their payrolls in February and the jobless rate knock down to a four year low, however Wall Street wait for the Fed to continue its bond buying program.

The Fed’s loose monetary policy has helped to drive yellow metal to record highs in recent years, while investors have hunted a hedge against a growing inflation outlook due to money printing by the central bank.

Although symbols of upturn have emerged, fueling assumptions that the Fed would restrain its monetary stimulus sooner rather than later, sapping interest in precious metal.

Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong said that the Yellow metal prices have built in the outlook that the US revival is on a good footing and by the end of the year we should watch that the Fed exiting the incentives, which should be bearish for precious metal.

A temporary bounce in bullion is possible, because concerns regarding the strength of the US revival and expectations of aggressive monetary easing from the Bank of Japan coming month strength spur buying.

Spot gold added 0.3 percent to $1,582.11 per ounce by 0634 GMT, recuperating from a two week low of $1,560.80 per ounce during the previous trading session.

US gold was also climbed up 0.3 percent at $1,581.30 per ounce.

Technical analysis recommended spot gold float in the range of $1,564.44 to $1,585.90 per ounce.

Holdings of SPDR Gold Trust, the world’s greatest precious metal’s backed exchange traded fund, knock down 3.311 tonnes to 1,239.739 tonnes by the end of previous week, the weakest since October 2011.

Mar
5

Gold Break 4 day Turn-down, Central Bank Conference in Focus

Yellow metal climbed up on Tuesday to break four sessions of turn down, with investors expecting major central banks to fix to loose monetary policy at conference this week, supporting precious metal’s appeal as a hedge against inflation.

However the in progress migration from exchange traded yellow metal funds pulled on prices, with some investors regaining their desire for riskier assets such as equities as the global economic position brightens.

Janet Yellen, the US Federal Reserve’s influential vice chair stated on Monday that the central bank’s hostile monetary stimulus is warranted specified how far beneath its full potential the economy is operating.

A number of central banks will hold policy conference during this week, including the the Bank of Japan, Reserve Bank of Australia , the Bank of England and the European Central Bank. The ECB and the BOJ are both expected to hold stable, as the BOE is seen under mounting pressure to relaunch its bond buying programme.

Holdings of the SPDR Gold Trust, the world’s largest gold backed exchange traded fund knock down for the tenth instant session on March 4 to a seven month low of 1,253.283 tonnes.

Spot gold climbed up 0.1 percent to $1,575.60 per ounce by 0045 GMT. US gold augmented 0.2 percent to $1,575.30 per ounce.

Jan Skoyles, head of research at The Real Asset Co. Said that strong US economic figures, a improving Chinese economy and quiet in the euro zone were between the driver’s of precious metal’s drop previous month.

Same factors which are now providing support to the yellow metal’s price were further bailout talks in Greece, unrest in Italy’s political world, the automatic budget cuts in the US and less than expected statistics from China’s services industry have now reminded investors that this crisis still has a long way to run.

Gold future for April delivery increased 10 cents to advanced at $1,572.40 per ounce on the Comex division of the New York Mercantile Exchange. Prices had touched a low of $1,569.70 following rose as high as $1,584.30 per ounce.

Mar
2

Ben Bernanke Said Premature Fed Recoil could short Course recovery

Ben Bernanke, the chairman of the Federal Reserve stated on Friday that pulling back on violent policy measures too rapidly would create a real risk of damaging a still delicate recovery.

There has been some dissimilarity within the Fed of whether the US central bank’s bond buying program, which is planned to push down long term interest rates should be segmented out.

Jeremy Stein, Fed Board Governor argued recently there were symbols of overheating in some financial markets and that the central bank should believed in using monetary policy to address such risks if they continue.

The Fed chief Ben Bernanke was not convinced, saying that even for the reason of financial stability, a persistence of the central bank’s aggressive incentive, conducted through purchases of mortgage securities and Treasury, leftovers the best approach.

Bernanke said in remarks, in light of the reasonable pace of the recovery and the sustained high level of economic loose, dialing back adjustment with the goal of preventing extreme risk taking in some areas poses its own risks to development, financial stability, price stability.

In reaction to the financial crisis and deep recession of 2007-2009, the Fed not only cut official rates to effectively zero, however also bought more than $2.5 trillion in assets in an effort to keep long term rates low. Still economic growth leftovers submissive and is expected to register just 2 percent this year, although the jobless rate remains high at 7.9 percent currently.

Bernanke said premature rate boost would carry a high risk of short circuiting the revival, perhaps leading ironically enough to an even longer time of low long term rates.

He illustrious that a stimulative monetary policy was simply a reaction to economic conditions, rather than any effort to keep rates unnaturally low to inflate asset prices

Policymakers are cognizant of potential risks to financial stability, although indicating a preference for employing authoritarian and supervisory tools to mitigate any potential fallout from the Fed’s low rate policy.

 

 

Feb
26

Federal Reserve Chairman Ben Bernanke To Face Fed Critics In Testimony To Congress

Bernanke face the first of two days of congressional demonstration that will subject the Fed’s contentious bond buying program to strong scrutiny and measure his confidence in the resilience of the US economy.

Approaching just a week following the Fed’s conference notes sent US stocks reeling by signifying the central bank could pull back its economic incentive earlier than had been expected, and a day following another sharp stock market plunge, investors are sure to hang on every word.

Starting with the US Senate Banking Committee on Tuesday, the scholarly Fed chief will be questioned by some bitter critics of the violent steps he has supporter to encourage growth. On Wednesday, he will emerge prior to the House Financial Services Committee.

Economists at TD Securities in New York stated in a note to clients that his opinion remains that there is still not sufficient growth, that high unemployment is a recurring issue there is not adequate inflation. He will keep the switch to the metal deep into 2013.

The Fed chairman’s equipped testimony is planned to be released at 10 a.m. (1500 GMT) Today, pursue by a lengthy question and answer session. By custom, he will issue the same declaration on Wednesday prior to facing the House panel.

Lawmakers in both chambers will look for his remarks on the possible impact of $85 billion in across the board government spending cuts that are set to take effect on March 1.

Ben Bernanke is expected to repeat his line that the random chopper they take to the budget will hurt the upturn, and disputed that it would be better to cut the deficit over time and avoid the risk of a near term fiscal astonishment.

Lawmakers will also question him regarding the Fed’s bold bond buying program, which has tripled the dimension of the central bank’s balance sheet to $3 trillion since 2008.

Jan
5

Average job growth points to slow Crush for US economy

US employers kept their swiftness of hiring stable in December, declining short of the levels required to bring down a still superior unemployment rate and summiting to lackluster economic growth in 2013.

Statistics on Friday present stronger signals on the health of the economy, with the US service sector activity increasing the most in 10 months.

Labor Department stated that the payrolls, apart from farm jobs grew by 155,000 previous month. That was a more than analysts’ expectations and only somewhat below the revised addition of 161,000 reported for November.

The jobless rate was stable at 7.8 percent.

Although firms kept on hiring despite the worries lift by a budget stand off in Washington, the report reinforced outlook of 2 percent economic growth this year.

Such sluggish growth is doubtful to quickly bring down the unemployment rate and perhaps will not make the US Federal Reserve alter its stimulus plan anytime soon despite rising unease among some policymakers over its bond buying program.

Most economists anticipated the US economy will be held back this year by weak spending by households and businesses and tax hikes, which are still trying to decrease big debts taken on earlier than 2007-09 recession.

Addition in employment were dispersed broadly throughout the economy, from the health care to manufacturing. The government also stated 14,000 further jobs were created in October and November than initially estimated.

On Thursday, notes from the Fed’s December policy evaluation pointed to increasing concerns over how the asset purchases will affect financial markets. James Bullard, St. Louis Federal Reserve Bank President believe to be less tolerant of inflation than many of his colleagues at the central bank, stated on Friday the bond program could finish this year if the economy improves.

Oct
20

European Union Leaders Agree On Bank Omission Amid Angela Merkel Questions

German Chancellor Angela Merkel stated it’s an open question whether European policy makers can rally the deadline that they set hours prior to launch a Europe-area bank supervisor from the end of year.

Merkel informed reporters following a two day EU meeting in Brussels wrapped up today that there are problematical questions to simplify and we will distinguished in December that they complete it or not, for now, the political will is there.

The supposed banking union dominated meeting at the 20th crisis hostile European meeting, pinning down a method that French President Francois Holland and Merkel worked out on Friday prior to the chief’s assembly. Leaders admired Greece for its budget cutting efforts intended at securing it’s subsequently aid installment. They avoid questions of how and when Spain might secure additional assistance.

The remarks highlighted Germany’s go slow reached that may confuse plans laid down in June to split the relation among governments and banks that has deteriorate the region’s debt crisis. She also ruled out allocating Spain to shift bank bailout loans off its balance sheet if they are completed prior to the new system starts in use.

The ECB is placed to become the community main financial supervisor by Jan. 1, elevated the outlook of direct aid to Spain’s banks throughout 2013, the 27 EU leaders decided at the meeting. The system will segment in and could cover all 6,000 Europe area banks by Jan. 1, 2014.

Mariano Rajoy, Spanish Prime Minister stated that he is not facing stress to seek a sovereign rescue and he would not take any such pressure into description in any case. Spain previously has secured a 100 billion Europe which is equal to 130 billion dollar financial sector support and has so far not required asking for aid that would release ECB bond buying.

The EU leaders guarantee to make certain that the particular administrator won’t put countries outside the euro area at a weakness. They said non Europe nations that link the supervisory structure can obtain reasonable representation and treatment, and concentrated technical work in this area will continue.