(Kitco News) - The Federal Reserve has indicated for the second day in a row, that further measures to stimulate the possible to help assist with the US economy are driving gold to an all-time high.
The Fed has announced not actually no new action and is still monitoring the economy, whether they are even necessary. But at the moment, the gold market is factoring in further humiliation of the US dollar, analysts said.
Messages that is thought the fed at least of more stimulus comes at a time when the yellow metal debt and political gridlock in the United States on the increase of the debt is reinforced ceiling already by European before of a beginning August target to avoid a default.
August gold has so far Wednesday at $1,588.70 an ounce on the COMEX Division of the New York Mercantile Exchange, a record for the most active contract reached. 1:08 Am EDT it was up to $23.10 or 1.5% to $1,585.40 an ounce. $18.60 Spot gold was higher at $1,585.90 an ounce.
The next obvious target for the market is oz the strong round of $1600.
"How have we been trade in the last few days, we (could be) five minutes," said Mike Daly, gold and silver specialist with PFGBEST.
The Fed said last month that it not on a third round of the purchases of government bonds in a move restrict long-term income, called quantitative easing which has been taken. The second round of QE June 30 ended. Minutes of the meeting of June 21-22 of the FOMC, published in the Tuesday afternoon, showed however that a minority is considering at least further action.
Then testimony confirmed Wednesday morning Federal Reserve Chairman Ben Bernanke primarily in Congress, that policy makers are considering more relaxation. He said that economic weakness may be more persistent than expected "implies a need for additional policy support.", he also said that the Fed is to look at several "untested" steps to revive the economy.
Markets went from think not not long ago it said further momentum so far very well it can think would Daly.
"It's called many things, but every form of printing money is obviously dilutive of the dollar and this is of course good for gold,", said Jeff Clark, precious metals analyst at Casey Research. "This is the main reason why gold is moved."
Of course the Fed has embarked on yet further impetus. Time will tell whether it is done.
"But an obvious indication that they are to look at it there." Let us say so, "Clark said. Later he added: "the markets are interpret as she probably will." "And that is why gold is up."
Not only gold is up and the dollar down, but the Dow Jones industrial average is around 120 points higher on the prospects for more stimulus measures.
Any further easing also added worry about inflation, said Daly and George Gero, Vice President at RBC capital markets global futures. Already, China tries the inflation fueled in part by high commodity prices added included Daly.
Mark Johnson, portfolio co-manager who dismissed USAA precious metals and minerals Fund, pointed out that the FOMC minutes Tuesday left the door released open for the fed to loosen or to tighten up policy on the road. Policy makers are considerable flexibility gave, he hit.
"I think you have the instructions for the underlying conditions to look,", he said. "And the business environment would claim basically will there be no tightening anytime soon."
This implies negative real interest rates further, which debases the dollar and created a favourable environment for gold, he said.
"If you, with the continued deterioration of the sovereign debt link problems in Europe, you have another driver for gold, since further to ensure the long-term viability of the euro in question people", said Johnson.
European financial officials who offers bailout loans while encouraging troubled Nations to carry out austerity measures. Analysts often describe on the net as "can occur on the road, the" effect, as countries are in the main bond money debt obligations to meet.
"she continue to the can on the street kick, but the can is getting bigger and heavier," said Johnson. "At some point if they it kick, they go to their feet to break."
Meanwhile, Daly said the market is from only a month or two of the time when it tends to draw seasonal gift holiday support. A number of important holidays occur in autumn in India, a major gold consumers followed by the Christmas season in Western countries.
The purchase of technical chart factors is acceleration, Gero said.
"It looks like we are before the race," he said. "The Bernanke comments play a role in getting the technical dealer and basic dealer involved."
The latest FOMC developments in the short and long term are bullish for gold, Clark said. But ", this does not mean that it is a straight line up to be," he added.
He and Johnson the metal said diving when Washington finally becomes an agreement on the debt reached ceiling, probably. "Every time if you take a risk factor of the table to mitigate gold would expect," said Johnson. Still, he and Clark said that this will be only a temporary setback.
"That will solve our structural debt, deficit and money printing problems is not," Clark said. "So in the long run this is nothing but positive for gold."
By Allen Sykora by Kitco news; asykora@Kitco.com
http://www.Kitco.com /.
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