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Gold Bullion 'Testing Downtrend' as Fiscal Deficits, Money Printing Urged by Pundits, Asset-Fund Chief

Friday, September 23, 2016 5:33
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(Before It's News)

Adrian Ash is head of research at BullionVault, the world-leading gold trading & ownership service online…

GOLD BULLION dropped $10 per ounce from yesterday's 2-week highs on Friday in London, falling to $1333 per ounce before turning higher as global stock markets fell but bond prices rose following this week's “no change” decision on US rates from the Federal Reserve and the Bank of Japan's switch to unlimited QE monetary stimulus.
 
Silver cut its weekly gain to 5.4% after nearing 1-month highs above $20 per ounce on Thursday.
 
Adding 1.8% from last Friday's finish, gold bullion held bang in the middle of its post-Brexit range between $1302 and $1375 as New York trading began.
 
“Central banks have been doing their best to pep up [global economic] demand,” says The Economist magazine's lead editorial.
 
“Now they need help…the most urgent priority is to enlist fiscal policy. The main tool for fighting recessions has to shift from central banks to governments.”
 
“Austerity is causing too much pain,” wrote veteran financial journalist and columnist Anthony Hilton in last night's London Evening Standard.
 
“The only way we…the US, as well as Europe, can hope to revive demand and stimulate growth is for the Government to show leadership in building more roads, houses, airports and rolling out high- speed broadband – investing in infrastructure – even if it has to borrow or print the money to do so.”
 
“If whoever wins the [US] presidency focuses more on fiscal policy,” says Laurence Fink, CEO of giant asset-management group Blackrock – forecasting a possible 15% drop in stock values without it – “you could find ways of re-igniting the economic conditions of the world, which will help the capital markets.”
 
Looking at US Dollar gold prices, “The rally has packed a lot of punch in the last couple of days, and the market may need to consolidate,” say a note from investment and London bullion clearing bank HSBC's precious metals team.
 
But HSBC sees “no compelling reason to change” its outlook for no further Fed rate hikes this year, with only 1 rise in 2017.
 
“This scenario gives gold more room to the upside.”
 
Touching $1343 per ounce at Thursday's high, gold was “testing a downward trend line from July forming on the daily chart” says technical analysis from London bullion market maker and clearing bank ICBC Standard Bank.
 
Chart of US Dollar gold bullion price, summer 2016
 

Gold bullion meantime headed for a 1.6% weekly rise against the Euro, a 2.4% rise versus the Pound Sterling, and a 1% gain in Canadian Dollar and Swiss Franc terms.
 
The Japanese Yen however held the metal just 0.7% higher from last Friday's finish, as the currency continued to defy the Bank of Japan's active new inflation policy – announced Wednesday – at an exchange rate of fewer than ¥101 per US Dollar.
 
Vowing to keep creating new money to buy government bonds and other assets without limit, the BoJ already owns one-third of Tokyo's record government debt – now on track to reach 250% of the country's economic output in 2015.

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK’s leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – winner of the Queen’s Award for Enterprise Innovation, 2009 and now backed by the mining-sector’s World Gold Council research body – where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2010

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.

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