Spot gold pushed higher to $1779 in the European session as the Bank of Japan announced that it will increase its asset buying and loan programme by 10 trillion yen.
The Bank of Japan announced was right in line with Central banks around the world have been doing, following in the footsteps of The European Central Bank and the Federal Reserve of the U.S. Central bank accommodation is viewed as bullish for gold because it devalues paper currencies and leads to future inflation.
Precious metals have paused after two solid days of gains last week after the after the Federal Open Market Committee (FOMC) announced further loosening of monetary policy to reinvigorate the sluggish U.S economy launching QE3 after much anticipation.
Markets rallied sharply as the FOMC announced a third round of Quantitative Easing in the form of Mortgage Bond buying, buying $40 billion MBS monthly and to continue operation twist.
The news rallied markets across the board with spot gold jumping $25 is a matter of minutes after the news release. The metal traded to a 6 month high of $1773. Crude oil jumped more than $1, while Equities moved over higher over the QE3 announcement.
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Precious metals traded higher ahead of the Federal Open Market Committee (FOMC) meeting slated for September 12-13 and taking currency cues with the Euro pushing to 1.2871.
It was a relatively quiet day on the metals markets as spot gold traded in a narrow range with a slight bias to the upside. The major focus is on the FOMC meeting slated for September 12-13. The yellow metal moved higher in early trade to $1738 as the Euro strengthened vs. the green back.
The market question is QE or no QE, after today it would seem that the market is fully expecting QE. Spot gold rallied $40 to its highest level in 6 months to $1742 amid poor U.S Nonfarm payrolls.
Spot gold finally broke higher to clear $1700 in European trade over night on speculation of European Central Bank president Mario Draghi's speech.
The much anticipated European Central Bank press conference with President Mario Draghi has dominated the headlines as well as the price action, spot gold jumped to $1716 prior to the ECB's president's speech as he took the microphone the metal sold off to just below $1700. Some highlights of the Draghi's speech.....
Spot gold pushed close $1700 as poor U.S data revived hopes of further Quantitative easing. Last week Fed Chairman Ben Bernanke left QE3 on the table as an option to jump start a sluggish economy.
After starting the session relatively higher, metals succumbed to profit taking ahead of Fed Chairman Ben Bernanke's speech at Jackson Hole symposium of central bankers, which started today.
It was a range trading day for precious metals as traders eye Jackson Hole meeting for the next QE3 statement.
Spot gold was range bound in the afternoon session touching $1672, before scaling back. The bullion remains at a 4 month high as Central bankers and finance ministers from around the world are set to meet at Jackson Hole, Wyoming on Aug. 31 and Sept. 1. Investors expect hints; if not the launching of QE3; from Fed chairman Ben Bernanke on steps the central bank might take to jump start a U.S economy that has remained sluggish.
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