Gold Drops Beneath $1,600 First Time In Last Six Months - What Is Ahead For 2013?

Regardless of current weakness in the Yen, Japan's trade deficit set a brand new record last month, figures published Wednesday show. Experts recommend buying gold and silver now. Read on...
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Feb. 23, 2013 - PRLog -- The spot gold price dropped beneath $1600 an ounce for the first time in six months Wednesday, because the Dollar strengthened and stock markets had been broadly flat, ahead of the publication of the newest Federal Reserve policy meeting minutes later. Silver fell to $29.19 an ounce, also a six-month low, while other commodity prices had been little changed on the day. How High Will Silver Go? Learn More >>

Significant government bond prices fell, with UK Gilts dropping sharply together with the Pound following the most recent Bank of England minutes.

Dealers in India reported an increase in gold purchasing these days, with some citing next week's spending budget as an aspect. "Most individuals in the marketplace are concerned about policy modifications in the spending budget," one dealer in Mumbai told newswire Reuters this morning. "Some kind of measures to curb gold imports may be there, that is why bullion players, particularly jewelers, are growing their stock levels." Last month, India raised the import duty on gold from 4% to 6%; with authorities getting cited gold imports as an aspect exacerbating the present account deficit.

Over in China, trading volumes on the Shanghai Gold Exchange continued to fall Wednesday, getting set a record on Monday because the exchange re-opened following Lunar New Year week.

"We have noticed fairly powerful interest in the domestic marketplace as prices weaken," says one trader in Beijing, "although such demand is unable to push prices a lot soon as prices stabilize about this level, we might see demand dwindle. But another sharp retreat or rally in prices will trigger a lot of investment and physical gold demand."

Less than 3 months following setting a brand new all-time record, the Euro gold price fell beneath €1200 an ounce for the first time since December 2011 this morning. Rare Coins, Silver Coins, Gold Coins >>

The Pound meantime fell to a nine-month low against the Dollar this morning, dropping sharply instantly following the publication of the newest Bank of England Monetary Policy Committee minutes. The minutes show that 3 of the nine MPC members - such as the present governor Mervyn King - voted earlier this month to increase the size of the Bank's quantitative easing plan from £375 billion to £400 billion, using the majority voting to leave it unchanged.

"The Committee agreed that, as long as domestic cost and price pressures remained constant with inflation returning to target in the medium term, it was suitable to look through the short-term, albeit protracted, period of above-target inflation," the minutes read.

"The BoE minutes shocked around the dovish side," says Citigroup strategist Valentin Marinov, "which might be noticed as disappointment for all those considering that a lot of negatives are already in Sterling price by now." "This lowers the bar for further intervention," adds Deutsche Bank economist George Buckley, "though we nonetheless argue that when the BoE’s forecasts for sticky inflation and GDP development steadily recovering are proved right no more quantitative easing will probably be required."

Gold in Sterling jumped to £1048 per ounce instantly following publication of the minutes, slightly above the prior high for this week, prior to trading lower towards lunchtime in London. The UK's three-month unemployment price meantime rose to 7.8% in December, up from 7.7% a month earlier, information published this morning show, even though January's claimant count figure fell by more than anticipated.

In the US, the Federal Reserve publishes the minutes of last month's Federal Open Market Committee later today. "The Committee expects that a extremely accommodative stance of monetary policy will stay suitable for a considerable time following the asset buy plan ends and also the financial recovery strengthens," stated the statement published immediately following that meeting.

"We suspect the Fed will once more spell out its prolonged easing stance in very clear terms," says Ed Meir, analyst at brokerage INTL FCStone, "but whether or not this really is going to become sufficient to trigger a round of renewed [gold] purchasing is doubtful." "We do not believe there should be something in the minutes to spook the markets," adds Standard Bank currency strategist Steve Barrow, "but we certainly sense that the marketplace is more sensitive to hawkish comments implying tighter policy than dovish ones."

Before the Italian elections beginning on Sunday, former Prime Minister Silvio Berlusconi's party has sent out a large number of letters to voters pledging to reimburse their IMU property tax. The letter told voters that should Berlusconi turn out to be economy minister; they'll have the ability to collect their tax rebate in the post office. "Silvio Berlusconi might be an efficient campaign strategist," German finance minister Wolfgang Schaeuble stated last week, "but my guidance to the Italians isn't to create exactly the same error once more by voting for him."

Regardless of current weakness in the Yen, Japan's trade deficit set a brand new record last month, figures published Wednesday show. Experts recommend buying gold and silver now. Learn More >>
Source:Franklin P. Whitman
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