The gold price
'Bernanke day' on volatile markets - Saturday 1st December 2007
Markets are again in the throes of uncertainty, as Federal Reserve chairman Ben Bernanke gave many investors reason to believe that yet another rate cut could be on the cards.
Without sending people queuing up to buy gold in anticipation of higher liquidity and a drop in the dollar's value, Bernanke did enough to give many on the markets the impression that the economic outlook is glum enough to justify a third rate cut in a matter of months.
His comments yesterday (November 20th) indicated that financial strains had in fact worsened over recent weeks, with investors waiting on today's economic data releases – chiefly the Personal Consumption Expenditures index – before assuming a rate cut was coming and staking clear positions.
Some analysts were, however, confident that the chairman's signals would be welcomed as a sure-fire sign of a cut, with Peter Cardillo, chief market economist at Avalon Partners, telling Reuters that markets were already factoring the anticipated slash into their behavior.
"It's going to be a Bernanke market today. Apparently the markets are interpreting the fact that he's hinting toward a rate cut," he said.
National Bank Financial recently laid out the implications for gold, claiming that a further cut to US interest rates would "continue to weigh the greenback down and that in conjunction with the high oil price will continue to keep the gold price elevated".
Without sending people queuing up to buy gold in anticipation of higher liquidity and a drop in the dollar's value, Bernanke did enough to give many on the markets the impression that the economic outlook is glum enough to justify a third rate cut in a matter of months.
His comments yesterday (November 20th) indicated that financial strains had in fact worsened over recent weeks, with investors waiting on today's economic data releases – chiefly the Personal Consumption Expenditures index – before assuming a rate cut was coming and staking clear positions.
Some analysts were, however, confident that the chairman's signals would be welcomed as a sure-fire sign of a cut, with Peter Cardillo, chief market economist at Avalon Partners, telling Reuters that markets were already factoring the anticipated slash into their behavior.
"It's going to be a Bernanke market today. Apparently the markets are interpreting the fact that he's hinting toward a rate cut," he said.
National Bank Financial recently laid out the implications for gold, claiming that a further cut to US interest rates would "continue to weigh the greenback down and that in conjunction with the high oil price will continue to keep the gold price elevated".
Goldbug, 01 Dec '07
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