The precious metal dipped further yesterday to US$1793 an ounce before closing at US$1813 an ounce.
The decline was fuelled by the rise equities. Equities rallied because investors expected a proposal by
Obama in his speech to congress, to introduce US$300bn to generate jobs. The current unemployment
rate is around 9%.
To boost the decelerating economy it is expected that in Fed’s meeting on September 20‐21, 2011 a
few short‐term Treasury securities would be replaced by long‐term debt in order to reduce yield on
long term debt. This would attract investors towards gold for investing their wealth thus increasing
bullion prices.
Moreover, to support those unemployed Federal Reserve Bank of Chicago called for a commitment to
keep interest rates low until unemployment falls to 7.5% whilst keeping medium‐term inflation below
3%.
Furthermore, according to the Federal Statistics Office in Wiesbaden German exports fell 1.8% in July,
after dropping 1.2%. Imports also declined 0.3%. This indicates slow down in the global economy and
will tend to benefit gold.
We estimate that as the US economy continues to recover gold will fall near to US$1700 an ounce but
will also rally nearing 2012 as US cuts spending and economic slowdown hits various other countries
such as Japan, China etc.
The decline was fuelled by the rise equities. Equities rallied because investors expected a proposal by
Obama in his speech to congress, to introduce US$300bn to generate jobs. The current unemployment
rate is around 9%.
To boost the decelerating economy it is expected that in Fed’s meeting on September 20‐21, 2011 a
few short‐term Treasury securities would be replaced by long‐term debt in order to reduce yield on
long term debt. This would attract investors towards gold for investing their wealth thus increasing
bullion prices.
Moreover, to support those unemployed Federal Reserve Bank of Chicago called for a commitment to
keep interest rates low until unemployment falls to 7.5% whilst keeping medium‐term inflation below
3%.
Furthermore, according to the Federal Statistics Office in Wiesbaden German exports fell 1.8% in July,
after dropping 1.2%. Imports also declined 0.3%. This indicates slow down in the global economy and
will tend to benefit gold.
We estimate that as the US economy continues to recover gold will fall near to US$1700 an ounce but
will also rally nearing 2012 as US cuts spending and economic slowdown hits various other countries
such as Japan, China etc.
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