Browsing all articles tagged with monetary policy
May
2

Precious Metal Holds Near 1 week Low, ETFs Outflows Persist

Precious metal held near its weakest level in practically a week on Thursday, following declines in holdings of exchange traded funds, equities and other commodities overshadowed the US Federal Reserve’s decision to uphold its loose monetary policy.

Prices fall $225 per ounce between April 12 and 16 on fears of a withdrawal of the Fed’s monetary stimulus and after the International Monetary Fund and the European Central Bank asked Cyprus to sell reserves as part of a bailout deal.

While the Fed’s money-printing to buy assets could stoke inflation, yellow metal has been overwhelmed by fears of sales by central banks and a fall in global bullion ETF holdings to their lowest since September 2009.

However this is unlikely to be sold on the open market. I consider another central bank will be buying it. China’s physical demand is still strong. This morning they are perhaps keeping a lookout to see where the market is going before purchasing.

Precious metal fell $3.05 per ounce to $1,453.69, having shed more than 1 percent in the previous session its largest daily drop since gold’s historic decline in mid-April. It smash a low of $1,439.74 on Wednesday, the weakest since April 25.

Brian Lan, managing director of GoldSilver Central Pte Ltd in Singapore said that people are more wary as yellow metal has been trading within the same trading band. Moreover, Europe has agreed on a loan deal for Cyprus, and one of the terms state that assets in bullion might be sold.

US gold for June delivery stood at $1,453.70 per ounce, climbed up $7.50.

In its statement subsequent a two-day meeting, the Fed reiterated it would carry on to buy $85 billion worth of bonds each month to support a moderately expanding economy that still has too high an unemployment rate.

Investors are now waiting for US non-farm payrolls report for April scheduled for release on Friday, which will signal the longer term predictions for the Fed’s monetary stimulus.

However instead of rallying on the news, yellow metal tracked other markets lower on renewed doubts over the Chinese and US economies following the latest economic data from both countries elevated doubts about the strength of the global economy.

The US economy is likely to have added 145,000 jobs.

March’s number chop down far short of expectations at 88,000, triggering a sell-off in riskier assets. Precious metal for June delivery added $9.70, or 0.7%, to $1,456 per ounce.

China’s factory sector growth eased in April as new export orders chop down for the first time this year, a private survey showed on Thursday, suggesting the euro zone slump and sluggish US demand may be risks to China’s economic recovery.

Apr
10

Gold Added on Japan Policy, Firm Equities May Weigh

Gold climbed up on Wednesday because Japan’s aggressive monetary easing policy enhanced bullion’s appeal as a hedge against inflation, while gains may be capped as stronger equities lure buyers seeking superior returns.

Brian Lan, managing director of GoldSilver Central Pte Ltd said that what the Fed really releases in the minutes tonight will influence the direction of gold. Yellow metal needs to test $1,600 before we see it trading in a higher band. If it does not there might still be a downside risk.

Investors are shifting their focus to minutes from the previous US Federal Reserve monetary policy conference for insight on the Fed’s bullion friendly bond buying programme, which sent prices to an 11 month high in October previous year.

It has fall about 5 percent so far this year, following posting annual additions in the past 12 years.

Investors will be looking out for any reveal of quantitative easing. The decision on whether the Fed will continue to print money, limit the print or slowly ease it out will definitely drive gold’s prices.

Precious metal had gained $2.14 per ounce to $1,586.84 by 0610 GMT, following hitting $1,590 on Tuesday, its highest since April 2.

Gold futures on Tokyo Commodity Exchange moved towards a ever high at 5,081 per ounce yen a gram strike in February as of a weak yen, however the climb in TOCOM failed to spur more additions in cash gold.

The addition in Tokyo gold futures weighed on yellow metal bars offered to investors. Precious metal were at discounts of 75 cents to spot London prices in Tokyo, against premiums of 50 cents previous week.

South Korea said it has invite China, North Korea’s only major supporter, to restraint the hermit state and has raised its surveillance following the North moved at least one long-range missile in readiness for a possible launch.

Gold future for June delivery were losing 90 cents, or 0.1%, in Asian trading hours to $1,585.80 per ounce. US gold for June delivery were stable at $1,587.00 per ounce.

Apr
6

European Central Bank ‘s Coeure sees euro zone inflation straying off course

Executive Board member Benoit Coeure said that ECB will monitor euro zone inflation carefully over the next 18 months because it threatens to sink further below the ECB’s 2 percent target.

Euro zone inflation fall in March for a third straight month to an annual rate of 1.7 percent, compared to the ECB’s target of close to, however not above 2 percent.

Coeure told reporters that they have a rate of inflation which looks set to move away from the ECB’s 2 percent target over the coming 18 months, adding that a slump in inflation was as worrying as a climb.

Coeure further said that it is still fairly close to the 2 percent target however it is moving below that goal and this is something the board of governors is clearly following because they have a goal of 2 percent.

Current economic statistics is in line with the ECB’s projections for the bloc this year and coming with no bad surprises, saying this justified the bank’s resolution this week not to lower rates, despite doubts regarding weak domestic demand.

The ECB held rates at a record low 0.75 percent on Thursday the maximum level between the world’s major central banks, however ECB chief Mario Draghi stated the central bank stood prepared to act to boost the stalled economy.

Underlining the difficulties receiving credit flowing in the alliance, Coeure stated many banks were discouraged from granting new loans because their balance sheets remained weighed down with assets acquired before the financial crisis which had since lost value.

Though the ECB has provided huge amounts of liquidity to banks, Coeure stated the central bank did not have a position to play in mitigating the risks from banks’ pre-crisis legacy assets.

Monetary policy cannot be the main tool used to attempt and resolve difficulties with credit flows. Monetary policy can contribute however it cannot completely resolve these problems.

The ECB is concerned its low rates are not getting households and companies in the euro zone margin, mainly as banks’ funding costs in crisis-hit countries are higher than those in the core countries pushing up loan costs.

Mar
22

Easy Federal Reserve Softens Fiscal Policy Strike On Economy

According to economists who have been scrambling to raise their growth forecasts, the Fed ‘s aggressive easing of monetary policy is demonstrating unexpectedly effective at blunting the blow to the US economy from tighter fiscal policy.

Economists had feared deep government spending cuts and higher taxes would exploit growth in the first quarter, however a series of strong economic data has so far proven them wrong. And they principally blame the Fed.

Tom Higgins, global macro strategist at Standish Mellon Asset Management in Boston said that the monetary policy is launch to gain some traction here.

According to Higgins, if it were not for the monetary incentive the economy would perhaps facing growth of a 1 percent annual rate or less, he anticipate growth to come in at a 2.5 percent pace in the first quarter.

The US central bank has held overnight interest rates near zero since December 2008 and has pushed around $2.5 trillion into the economy by acquiring mortgage-backed bonds and Treasury debt in a bid to promote faster growth and decreasing unemployment.

On Wednesday, it recommitted to plans to buy $85 billion worth of bonds each month and stated it would keep buying assets until it sees a considerable improvement in the labor market.

These activities have assist to put the economy in better shape to compact with the end of a 2 percent payroll tax cut, higher tax rates for rich Americans and $85 billion in across-the-board government spending cuts which is known as the sequester.

The easy money position has given a increase to interest rate sensitive sectors of the economy, such as housing and autos.

The vowed to easy policy also emerges to be lifting business confidence, which in turn is underpinning stock market and the job growth. Non-farm payrolls augmented 236,000 in February and the jobless rate knock down to a four-year low of 7.7 percent.

Mar
13

American economy is sluggish and Fed Chairman Ben Bernanke is the accelerant

It look similar to just like yesterday Bernanke adviser Alan Greenspan confess to Congress that he found a flaw in the free market principles that drove America’s monetary policy for his term as Fed chairman, America to figure out that self regulated free markets did not work.

Unfortunately nothing changed and Greenspan handed off to Bernanke. And that same faulty principle is still misleading world’s 192 central banks and the America’s central bank headlong into another disaster greater than 2008. And the chain of command over the confirmation is obvious, Greenspan begning with Reagan. Then Bernanke with George W. Bush accumulating further eight years of fiscal policies and failed monetary.

Currently, Bernanke and Obama policies prolonged, favoring banks with their high pace, cheap money printing presses. And if America’s speed up debt is the metric, historians are previously judge Greenspan strictly. In future, history will be even firm on Bernanke, He never learned the lesson that Greenspan’s failed free market ideology harshly smashed the American economy.

Hiding behind the fantasy of today’s current stock market records is an economy and markets that are highest, close to crashing. However their leaders are in rejection. A new economic bubble is blowing greater than the 1990s, greater than Wall Street’s credit reduced, both driven by the same defective monetary principles that’s now a bug spreading across America’s political system.

The Institute of International Finance which groups 450 banks stated that if central banks carry on to flood money into the global economy then any outlook bid to get it under control could itself weaken the financial system and quantitative easing, very low interest rates, cannot stay forever, however the risk is that financial markets have become captivated to them.

Mar
11

Bank of Japan nominee Declaref Swift Action As Orders Statistics Disappoints

The Japan government’s option to direct the country’s central bank assurence on Monday to shift swiftly to apply fresh monetary stimulus to boost the struggling economy, a case emphasize by a surprisingly sharp fall in a gauge of capital investment.

Haruhiko Kuroda said that speed is important, he would do what ever it takes to strike the BOJ ‘s inflation target of 2 percent, although the economy has hardly ever seen that level of inflation since the early 1990s.

He told official’s in an upper house confirmation hearing, he want to discuss policy steps with the monetary policy committee and execute these steps as soon as possible.

Haruhiko Kuroda is likely to be approved by parliament afterwards this week as opposition parties, whose support is essential in the upper house they have indicated they would back him.

Followers of the additional aggressive monetary policy supporter by Prime Minister Shinzo Abe can point to a 13.1 percent fall in core machinery orders in January from December, as importance the need for critical action.

Government officials and Analysts recommended the much weaker than expected statistics were a failure in a typically unpredictable statistics series, however they did demonstrate companies remained careful in their spending plans.

Significant of the BOJ’s gradual easing steps under outgoing chief Masaaki Shirakawa, Abe previous month nominated Kuroda to replace him. Kuroda has advocated bolder and rapid action such as buying additional risk assets and more and longer dated government debt.

If permitted by parliament, Kuroda would step down during coming week as president of the Manila based Asian Development Bank and take over the BOJ following Shirakawa’s term ends on March 19. The BOJ’s next policy conference is due on 3rd and 4th April, with financial markets expecting firm action.

Mar
9

Christine Lagarde Said ECB should Cut Rates, Allow Higher Inflation

The head of the International Monetary Fund said on Friday that the euro zone may require superior inflation in countries like Germany and lower interest rates across the federation to make sure a persistent economic recovery fetch obvious benefits.

Christine Lagarde said as Europe had come a extensive way since previous summer and financial concerns have eased somewhat, further needed to be done to deal with harmfully known underlying issues.

Repeated a call in January for the ECB to keep its monetary policy easy, the ex- French finance minister stated there was scope for a further cut following Frankfurt kept rates at 0.75 percent this week.

Monetary policy should stay accommodative, and they believe that there is still some partial scope for the ECB to cut additional rates, Lagarde stated in comments prepared for a speech delivered in front of an audience that integrated Ireland’s representative on the ECB governing council.

Re-establish a logic of balance means lower inflation and wage growth in the south of the euro zone, however it also might mean permitted somewhat wage growth and higher inflation in countries like Germany, this too is an part of pan European harmony.

Lagarde has recommend countries to press forward with reform and fiscal promises, the swiftness of such modifications was crucial and the right balance was needed among placing the books in order and supporting the recovery.

The IMF chief said European leaders may required to focus less on headline deficit reduction targets to avoid damage economic growth and assist their recession hit people as well as looking for to reassure financial markets.

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.

 

 

Mar
1

Gold heads for 3rd weekly Drop as Stronger Greenback weighs

Precious Gold traded at a little changed rate on Friday and was headed for a third straight weekly decline, with a stronger Greenback weighing on outlook.

The US dollar index floated near a six month high strike in the preceding session as risk appetite was hurt by political doubts in Italy and US government spending cuts that are due to kick in. The US Greenback involved safe haven inflows, however that weighed on dollar priced commodities.

The US government is facing $85 billion in cuts across federal programmed on Friday, missing a highly doubtful last ditch deal, which could deliberate the US and world economies.

Holdings of SPDR Gold Trust, the world’s biggest gold backed exchange traded fund knock down 0.3 percent on the day to 1,254.487 tonnes on Feb. 28, the weakest since early August 2012. The fund saw a testimony monthly outflow of 73.606 tonnes in February.

Spot gold was little changed at $1,580.14 per ounce by 0045 GMT, following concluding February down 5 percent in a fifth consecutive month of turn down, its longest stretch of monthly sufferers in 16 years.

US gold climbed up 0.1 percent to $1,580 per ounce.

The factors that contributed to precious metal’s fifth straight monthly turn down were currency fluctuations, central bank monetary policy cues, asset relocation, economic data and emerging markets are usually the same as they have been for yellow metal’s more than decade long bull run.

Jan Skoyles, head of research at The Real Asset Co said that gold’s investment platform contribute those that pay interest to the markets know that governments hold easy monetary policy, they knows that the euro will persist to have considerable problems and they know that currency wars will continue to rise. That is why precious metal bearish factors such as improved US statistics have greater impact on the yellow metal prices.