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Will pent-up demand and overreaction to tapering news lead to higher bullion prices?

*Reuters, by Jan Harvey & Julia Fioretti, December 17, 2013

”Speculation that the Fed will curtail its stimulus measures, which had driven bullion higher by pressuring interest rates and fueling fears of inflation, have already pushed gold prices down 25 percent this year.

But some analysts cautioned that any eventual beginning of the end of U.S. stimulus was not likely to spell the immediate end to a cheap flow of dollars.

‘They will reduce their bond purchases, that doesn’t mean they will stop it completely,’ said Commerzbank analyst Daniel Briesemann.

He added that uncertainty over the timing of the taper was the main factor weighing on gold prices recently.

‘If the Fed (comes) out with an announcement tomorrow that they are going to taper . . . then I could imagine that we might see a knee-jerk reaction first, but this should only be short-lived because the uncertainty is gone and should pave the way for higher prices thereafter.” ”

”Consumers of physical gold in Asia held off fresh purchases in anticipation of lower prices.

Volumes on the Shanghai Gold Exchange this week have been subdued, with less than 10 tonnes per day traded for 99.99 percent purity gold, compared to last week’s average of nearly 14 tonnes a day.

In India, buying remained low key due to non-availability of stocks, supporting premiums.”

*This information is solely a highlight of the opinion of a third-party publication and is incomplete.  Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.