Browsing all articles tagged with central bank
May
11

ECB Says Has Tools Left to Act if Required

ECB policymakers said that European Central Bank still has room to plan should the euro zone economy persistent to worsen following it cut interest rates to a new record low previous week. The ECB cut its main rate to 0.5 percent previous Thursday.

Yves Mersch, a member of the ECB’s six-man Executive Board stated the bank still had tools at its disposal, however added that it could only spur lending to small euro zone companies in combination with other European institutions.

Joerg Asmussen stated the ECB had an open mind about what it could do to renew lending to small and medium-sized enterprises known as SMEs a growing concern for the central bank, principally in the crisis-stricken periphery countries.

Mersch said in a panel discussion in the northern German city of Aachen that we still have tools in our toolbox we are not a toothless tiger.

The ECB stated previous week it had set up a task force with the European Investment Bank known as EIB to assess ways to unblock lending to SMEs, for example by supporting a market for asset-backed securities known as ABS based on SME loans. ABS would permit banks to pass some credit risk on to other investors, enabling them up to lend more.

The move to promote ABS is controversial mainly in Germany, because during the financial crisis such securities became toxic due to the default of housing loans that underpinned them.

We have an open mind to seem at all things that we can do within our mandate and this relates to how can the market for asset backed securities, particularly backed by SME loans, be revitalized in Europe.

Asmussen was responding to a question regarding a Wednesday article in German newspaper Die Welt, which cited a central bank source as saying a majority of ECB Governing Council members seemed to be in support of the central bank buying ABSs itself.

Apr
27

Gold down Still Posts Greatest Weekly Addition in 3 Months

Bullion knock down in choppy trade on Friday on as investors took profits, however the market still posted its greatest weekly gain in three months on strong physical demand following bullion hit a two year low previous week.

In untimely trade gold climbed more than 1 percent following the US Commerce Department reported that economic growth regained speed in the first quarter, however not as much as expected. Gold gave back those early additions and slipped into negative territory as options related selling kicked in, and losses in industrial commodities including copper and crude oil also weighed.

Gold has recovered more than half of the loss of $225 an ounce incurred among April 12 and 16.

Investors in exchange traded funds headed for the exits concerned regarding potential central bank sales of gold and uncertainty over the outlook for US monetary stimulus.

Erica Rannestad, precious metals analyst at the CPM Group said that there is still some long liquidation in the market, signifying that some investors are still repositioning themselves and that leaves the price susceptible to some sideways actions.

Spot gold was down 0.6 percent at $1,457.76 per ounce by 3:28 p.m. EDT (1928 GMT), off the session high of $1,484.80.

US gold futures for June delivery settled down $8.40 at $1,484.80 per ounce. Trading volume was almost 10 percent above its 30-day average.

Robin Bhar, Societe General Analyst said that GDP is encouraging for precious metal as the whole sell off in the yellow metal was linked to perceptions that the US economy was getting stronger and stronger.

US first quarter growth expanded at a 2.5 percent annual rate, less then economists expectations for 3 percent. In the meantime, a separate report on consumer sentiment demonstrates a drop from the previous month.

Silver also climbed early, striking a 10 day high of $24.82. Then it slipped down 1.7 percent in late trade to $23.91 per ounce.

Holdings of the biggest gold backed exchange traded fund, the SPDR Gold Trust dropped 0.25 percent to 1,090.27 tonnes on Thursday from 1,092.98 on Wednesday. Holdings are at their weakest level since September 2009.

Among platinum group metals, platinum added 0.4 percent to $1,472.49 per ounce, as palladium was down 0.4 percent at $677.25 per ounce.

Apr
25

IMF, ECB Square off in Europe Severity Debate

An intense debate about Europe’s austerity drive flared back into life on Thursday with leading IMF and European Central Bank officials harshly at odds and Angela Merkel declaring that Germany required superior interest rates.

With the threat of the currency bloc’s break-up retreating; some euro zone officials are saying currently is the time to throttle back on debt cutting drives as calmer financial markets will not react badly.

The International Monetary Fund is also pushing that prescription for both the Britain and euro zone however Germany and the ECB are opposed.

IMF First Deputy Managing Director David Lipton told a conference in London that there is a risk that Europe could drop into stagnation, which would have very serious implications for households, banks, companies and other bedrock institutions.

He further said that to decisively avoid that dangerous downside, policymakers must act now to strengthen the prospects for growth.

However at the same conference, the Economist’s Bellwether Europe Summit, ECB Executive Board associate Joerg Asmussen urged governments to push on with budget consolidation and reforms.

Asmussen said delaying fiscal consolidation is not a simple way out. If it were, we would have taken it; holdup fiscal consolidation is no free lunch. It means superior debt levels and this has real costs in the euro area where public debts are already very high.

The ECB is expected to cut interest rates coming week, even though a quarter-point reduction is unlikely to lift the euro zone economy out of recession.

Lipton said it will perhaps require additional unconventional measures from the ECB, as Asmussen said monetary policy was not an all purpose weapon.

The ECB is in a difficult position, for Germany it would really have to lift rates slightly at the moment, however for other countries it would have to do even more for more liquidity to be made available, she said at a banking conference, in a strangely outspoken comment on central bank policy.

Apr
25

Gold Rise to 1 Week High, Central Bank Purchases Hold up

Bullion climbed to its highest in more than a week on Thursday, enhanced by prospects of more central bank buying following a recent steep sell off in the gold, as a firmer euro also underpinned prices.

Turkey and Russia raised their gold reserves in March, the International Monetary Fund stated on Wednesday raising their holdings ahead of the spectacular plunge in prices this month that shocked ardent yellow metal investors and bulls.

Central bank purchases and surging physical demand helped precious metal bounce from a two year trough about $1,321 per ounce hit previous week. However daily outflows from exchange-traded funds, reflecting sagging investor confidence capped gains.

Gold reversed early losses and stood at $1,445.56 per ounce by 0621 GMT, climbed $14.76. It strike a high of $1,447.66 per ounce earlier in the session its loftiest since April 15 the day it posted its largest ever daily slump in dollar terms.

Bullion is torn between an increase in demand for jewellery and coins, and investors in ETFs cutting exposure because they became gradually more convinced the US Federal Reserve will look to end its bullion friendly bond buying programme by the end of 2013 or beginning of 2014.

Joyce Liu, an investment analyst at Phillip Futures in Singapore said if the price breaks above $1,447-$1,450 levels, there will be more upward momentum. If it does not we may see a further dip in precious metal prices.

Premiums for gold bars soared to multi year highs in Asia following a spate of physical buying ran down supplies, with dealers in top consumer India expecting a surge in imports this month.

Holdings of the greatest gold backed ETF, New York’s SPDR Gold Trust slump 0.38 percent on Wednesday from Tuesday, their lowest since late 2009.

Dealer in Singapore said strong physical buying in China is overflowing into Hong Kong. I heard if you have gold bars now people will buy them at $2.50 to $3.00 premiums.

US gold for June delivery climbed more than 1 percent to as high as $1,447.50, its largest since April 15, however some dealers cautioned the current rebound in cash and gold futures was far from sustainable.

Gold futures rise on Thursday in electronic trade, on track for a second consecutive proceed supported by strengthening physical demand for the gold and downbeat US economic figures.

Apr
23

Precious Gold Gives up Early Gainss, off 1-week high

Yellow metal reversed early gains on Tuesday, coming off a 1-week peak stroke in the previous session, because more outflows from gold exchange-traded funds known as ETFs summed up investors weakening confidence in the gold.

CIMB regional economist Song Seng Wun said that from a technical stand point, there are still downside risks to yellow metal prices. I suspect we have not actually seen the market turning around to be bullish in yellow metal prices just yet.

Investors were still thrashing their wounds following gold posted its greatest ever daily loss in dollar terms previous Monday in a brutal sell-off that surprised ardent precious metal investors and bulls.

However the recent sharp fall in prices and an uneven rebound has attracted buying interest in Asia, sending premiums for gold bars in Singapore to the greatest since 2008.

Gold smack a session high of $1,431.31 per ounce however gave up gains and stood at $1,416.26 by 0624 GMT, dropped $8.88.

Prices sank to about $1,321 on April 16, its lowest in more than 2 years. Precious metal has dropped around 15 percent this year.

US gold futures for June delivery stood at $1,415.40 per ounce, losing $5.80.

Physical buying persisted in Asia even though spot gold has bounce back more than $100 from previous week’s lows, keeping premiums for gold bars at multi month highs in Hong Kong and Singapore as supply also tightened for coins and other products.

Bullion has been caught in a tug-of-war among physical buyers seeking bargains and wary investors cutting exposure to the precious metal on nagging worries regarding central bank sales and prospects of easing inflation.

Singapore based dealer said that people are still buying yellow metal and India is coming in. However Thailand is slow as they are waiting for prices to come off again.

India, the world’s biggest gold consumer, celebrates Akshaya Tritiya, a key gold-buying festival coming month, as the wedding season will continue till early June. Indian parents give gold jewelery to their daughters at weddings as a custom.

Gold for June delivery knock down $5.30 or 0.4%, to $1,415.70 per ounce. In Asian trading, gold reached $1,426.40 per ounce, its highest level since April 12 according to FactSet data.

 

Apr
19

Gold jumps More Than 2 Percent, Still down for the Week

Yellow metal rallied more than 2 percent on Friday as its bounce back to  $1,400 per ounce spurred technical buying, however bullion was still heading for a fourth week of losses following a brutal sell-off shattered investors confidence.

Precious metal has been caught in a tug of war among physical buyers seeking bargains and wary investors cutting exposure to the gold on nagging worries about central bank sales and forecast of easing inflation.

Gold strike a session low about $1,385 before gaining strength to $1,414.30 by 0715 GMT, up $23.55. Dealers also noted physical buying, even though prices had added more than $100 since striking a 2-year trough earlier this week.

Physical dealer in Singapore, Prices have suddenly jumped however I guess it’s as gold has broken the $1,400-level again. Technically, people are just buying up again.

Physical buying from Thailand is not that strong. We are considering demand from Indonesia and local buyers and also modest from India.

Bullion investors are waiting for the 1930 GMT release of US CFTC statistics showing the newest trading by hedge fund and money managers for more cues.

The plunge in prices ignited a spate of buying in gold coins, bars and nuggets, sending premiums for precious metal bars to multi month highs in Asia. Buying also enhanced in top consumer India following a lackluster start.

This gives us some confidence that as panic selling passes, prices can rebound by $100 to $150 an ounce and trade in the $1,400 to $1,550 range over the next 3 to 6 months.

US gold futures for June delivery also staged a humble rally, standing at $1,414.30 per ounce climbed $21.80.

Selling on COMEX, blamed on the outflows on gold backed ETFs was accountable for a rout in the cash market. Spot gold recorded its largest ever daily drop in dollar terms on Monday, catching gold bulls, veteran and speculators investors by surprise.

Holdings of the SPDR Gold Trust, the world’s biggest gold backed ETF, are at their weakest in three years and there was also assumption hedge fund manager John Paulson a prominent gold bull might have liquidated his enormous gold stake.

Apr
16

Gold miners face New Challenge in Sinking Gold Price

A steep slump in the price of precious metal will strike profits at mining companies that are already straining under increasing costs, and could prompt some miners to reorganize their capital spending.

Although lower prices are not possible to wipe out miners profits, they will squeeze cash flows because companies are still feeling the impact of pricey acquisitions made at the height of the commodity cycle.

Yellow metal companies big and small sold off on Monday and Tuesday as the outlook of central bank bullion sales and fears that the US might reduce monetary stimulus tipped spot gold prices off a ledge, to a more than two year low around $1,300 per ounce.

Canada’s Barrick Gold Corp, which was forced to suspend construction on the Chilean side of its massive Pascua Lama gold and silver mine previous week over environmental concerns, fall 10.4 percent to C$20.55 on the Toronto Stock Exchange.

Pawel Rajszel, Veritas Investment Research analyst, who is broadly negative on the sector said that everybody was take pleasure in the high tide, and now that the tide is coming down you are seeing who’s swimming naked and the thing is everybody’s swimming naked.

The largest declines hit small and intermediate companies, which usually have less flexibility to focus exclusively on high quality assets than major producers.

The S&P/TSX Global Gold index ended with decreasing 9.3 percent on Monday following touching its lowest point since late 2008.

However competitor Goldcorp Inc was down a comparatively modest 4.7 percent at C$28.66.

Evolution Mining, which owns five gold and silver mines in Australia, drop 17 percent on Tuesday on the Australian Securities Exchange, as Alacer Gold, with gold mines in Australia and Turkey slipped 10 percent.

But bullion prices appeared to be recovering a small piece of that rout on Tuesday with futures up $16.90, or 1.2%, to $1,377.50 per ounce.

Mar
29

Bank of Cyprus Controls To Previous Month, Minister Says

Bank of Cyprus conceded on Thursday that firmed capital controls would remain in force greater than expected as the island’s banks reopened for the first time following the government was forced to believe a hashed EU rescue package to prevent bankruptcy.

Cypriots lined up peacefully to withdraw partial amounts of cash, however there was no symbol of a run on deposits, as had been frightened.

Banks were shut for almost two weeks as the government discussed a 10 billion euro which is equal to $13 billion international bailout, the first in Euro zone to enforced losses on bank depositors.

Ioannis Kasoulides, Foreign Minister stated curbs on money arrangements imposed following the bailout would be phased out over regarding a month.

A number of restrictions will be lifted and steadily, most likely over a period of about a month according to the estimation of the central bank, the limits will be fully lifted.

Government primarily stated the controls would remain in place for a week subject to reassess. Economists say they will prove hard to boost as long as the economy is in crisis.

A lot of money had already missing electronically. Statistics published by the Central Bank of Cyprus illustrate that savers from other euro zone countries withdrew 18 percent of their deposits from the suffering island in February, as talk of a tax on bank accounts added ground. Overall private sector bank deposits in Cyprus knock down by 2.2 percent to 46.4 billion euros previous month, following a similar slump in January.

To assist the Cyprus banks conditions the crisis, the ECB flew in 5 billion euros which is equals to $6.4 billion in cash overnight from Frankfurt.

Government said it had appointed a board to investigate the banking meltdown and look into assert of junior bondholders.

Constantinos Petrides, under secretary to the Cypriot president said that it will have a broad mandate. It will investigate criminal, political and civil responsibilities.

Mar
23

Federal Reserve Constrain Banks To Ignore Participant When Setting Bonuses

According to pay specialist and other people familiar with the matter said that the Fed is pushing banks to ignore competitors’ performance when awarding bonuses, and focus directly on their own profitability.

The central bank is expecting to change a extremely embedded habit on Wall Street, contribution bonuses to senior administrative based in part on whether the company’s performance beat rivals or paused.

The Federal Reserve worries that these comparative performance measures support executives to take huge risks to keep up with stronger challenger and reward executives even when their banks are not performing well. Supervisor also feared that banks may be paying management large sums at specifically the time when they should be reining in reward to protected capital.

The Dodd-Frank financial reform law charged the Fed with the application of new rules regarding Wall Street pay. At this stage the Fed is just talking to banks, and has not yet concerned directives or formal rules.

Regulators and Lawmakers expect that changing pay practices will trim down the chance of future financial crises, though some corporate governance experts question whether eliminating virtual performance from the depiction will have much impact on risk taking.

The greatest banks including Bank of America Corp, Goldman Sachs Group Inc, Citigroup Inc, Morgan Stanley and JPMorgan Chase & Co, believing performance contrast to competitors. Representative for those banks turn down to comment on discussions with the Fed, citing limits and penalties for speaking publicly regarding confidential matters.

Some who work on compensation plans at large banks argue that when times are good, rewarding comparative performance support executives to keep bundle instead of coasting. It also assist keep talent when times are tough.

Rose Marie Orens, a senior associate who focuses on financial services at the New York based consulting firm Compensation Advisory Partners said that the Fed has contacted some of her customers regarding comparative performance issues.

Lucian Bebchuk, a professor at Harvard Law School who spotlight on corporate governance and compensation that he stay a strong follower of relative performance over supreme performance. Bebchuk recommend pay czar Kenneth Feinberg when the concluding was charged with keeping bonuses in check at bailed out banks.

Mar
18

Precious Metals Strike 3 Weeks High on Cyprus Bailout Preparation

Yellow metal increased over $1,600 per ounce for the first time in more than two weeks on Monday because an unusual bailout package for Cyprus threatened to generate new disorder in the euro zone, attracting investors to seek safety in precious metal.

The euro zone decided on Saturday to hand Cyprus a bailout worth 10 billion euro’s which his equal to $13 billion, however enforced the country’s depositors to pay up to 10 percent on their savings regardless of the risk of a wider run on savings.

Investors will closely observe a US Federal Reserve policy conference on Tuesday and Wednesday to assess the central bank’s approach towards the aggressive monetary stimulus. Economists expected the Federal Reserve to keep buying bonds for the rest of the year to support the economic revival.

Holdings of SPDR Gold Trust the world’s largest precious metal’s backed exchange traded fund knock down 3.311 tonnes to 1,232.996 tonnes on Friday, the weakest since October 2011.

Spot gold climbed to a 3 week high of $1,608.30 per ounce today, earlier than lessening to $1,600.96 per ounce by 0024 GMT, climbed 0.6 percent from the previous close.

US gold also strike a 3 week high at $1,607.6 per ounce.

Precious metal’s prices pushed to height not seen in more than two weeks on Monday as investors sought out supposed safer alternatives to stocks, following the weekend pronouncement by the euro zone to force Cyprus to tax bank deposits as part of a bailout program..

Gold future for April delivery augmented $10.80 or 0.7%, to $1,603 per ounce.