You are hereHome CategoriesNews
More will join China and Australia in rate cutting, better gold price ahead?
Source: Sharps Pixley , Author: Austin Kiddle
Posted: Sun June 10, 2012 5:03 pm

INTERNATIONAL. Gold futures had a big turnabout in the past 48 hours. From last Friday to this Wednesday, gold futures surged 4.6%. On Thursday, prices slumped 2.8% to US$1,588, the biggest one-day drop since early April.

This week, gold futures have dropped 2.1%, compared to last week's rise of 3.4%. In the past two days, the S&P climbed 2.3% while the Stoxx went up 2.7%. The EUR/USD rebounded 1% this week while the Dollar Index fell 1%.

Gold prices have jumped in anticipation of more easing from the U.S., Europe and China. Real GDP growth in the U.S. has dropped from a recent peak of 3% in Q4 2011 to 1.9% in Q1 2012. In Q1 2011, the Euro Area grew by 2.4%; it contracted by 0.1% in Q1 2012. Chinese GDP growth went from 9.7% in Q1 2011 to 8.1% in Q1 this year, and the expected Q2 growth may drop to 7.9% or lower.

On 5 June, Australia cut its interest rates by 25bp, the first cut in 3 years. On 7 June, the PBOC (the Central Bank of China) announced they would cut the 1-year lending rate and the deposit rate by 25bp. This move signals the beginning of China's rate cut cycle to help investment and consumption. China last cut its interest rates in December 2008. The ECB, though kept interest rates unchanged, revealed that several Council members voted for an interest rate deduction.

In Friday's testimony to the Congress, Ben Bernanke did not announce any new actions, though he said the Fed still has easing options, citing that Europe is the biggest threat to the U.S. economy and financial system.

In the short-term, gold price will continue to be pushed around by traders' speculations on easing. The fundamental issues remain that global growth has entered a soft patch, sovereign funding costs in many European countries have continued to rise, the U.S. fiscal policy has been tightened, and China's excess capacity has jumped.

The world may well come to a loosely-coordinated monetary easing. With such low real interest rate and bond yield, gold stands out as a cheaper alternative asset.

The most important events to anticipate this month will be the 17 June Greek re-election, 18-19 June G20 meeting and the 19-20 June FOMC meeting.

 

Note: SharpsPixley.com is the the online platform for Sharps Pixley Ltd, a physical precious metals trader.

SharpsPixley.com aims to bring you the latest gold news, live gold prices and gold charts and is an online shop for buying gold bars and gold coins.

Buying gold has never been easier or more attractive and is a great investment. SharpsPixley.com will allow those interested in buying precious metals to buy gold against the live spot price of gold, and SharpsPixley.com will keep you informed of all the latest market trends using our gold news feeds, our gold charting tools, and displaying live gold prices from around the world.

This article is republished with permission from Sharps Pixley.

Click here for more information about Sharps Pixley.

© Copyright Sharps Pixley 2012

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. 
 


 

 

MIDDLE EAST BUSINESS COMMENT & ANALYSIS

date:Posted: October 29, 2014
UAE. Total wealth in the GCC stood at US$ 1.7 tillion in 2014, up 4.75% from 2013; Total wealth in Saudi Arabia and UAE grew by 5%; Global household wealth up 8.3% to US$263 trillion, driven by the US and Europe, according to Credit Suisse Research Institute.
date:Posted: October 29, 2014
UAE. Significant increase in inflows of private capital into UAE in 2014; UAE seen as hub between Africa and Asia; Political stability remains a major factor driving flows; UAE clear winner in the region, as other GCC countries see net outflows of private capital.
date:Posted: October 28, 2014
INTERNATIONAL. Foreign policy is what a president wishes would happen; foreign affairs are what actually happen; the problem that Obama has, which has crippled his foreign policy, is that his principles have not been defined with enough rigor to provide definitive guidance in a crisis.
UAE. Total wealth in the GCC stood at US$ 1.7 tillion in 2014, up 4.75% from 2013; Total wealth in Saudi Arabia and UAE grew by 5%; Global household wealth up 8.3% to US$263 trillion, driven by the US and Europe, according to Credit Suisse Research Institute.
dhgate