Fed chairman gives clear signal for QE3

English: President Barack Obama confers with F...

English: President Barack Obama confers with Federal Reserve Chairman Ben Bernanke following their meeting at the White House. (Photo credit: Wikipedia)

The much anticipated Jackson Hole, Wyo., speech took place this morning, with Federal Reserve Chairman Ben Bernanke giving indications that the Fed will soon embark on another round of bond buying, otherwise known as quantitative easing (QE). “It is important to achieve further progress, particularly in the labor market,” Bernanke said. “Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.” Bernanke cited previous rounds of easing as effective in stimulating economic development and job creation without hastening inflation.

The Gold price has had a turbulent morning. The metal fell immediately after Bernanke’s speech but quickly rebounded, leaving Gold at its highest level since April. “The main catalyst for the reversal in Gold has been that Bernanke used the words “grave concern” and the interpretation is that there’s going to be more QE if he’s using such dire projection for the economy,” said Jeffrey Sica, chief investment officer of SICA Wealth Management. Today’s rise in Gold price could be the first substantial gain in a rally that some analysts predict to breach $1,900 by year’s end.

At 1 p.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, 1,681.20, Up $25.60.
  • Silver, $31.23, Up $0.88.
  • Platinum, $1,535.30, Up $30.60.
  • Palladium, $627.90, Up $11.40.

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Disappointing jobs data; Gold prices on the rise

In overnight and early morning trading, Precious Metals prices were on the rise ahead of a key jobs data report due for release today. Worries continue to mount over European Union economic issues, and Chinese manufacturing data continues to shrink, but Precious Metals are offering some safe haven protection. Current economic conditions have some investors hopeful that another round of quantitative easing could be back on the table. Analyst Michael Lewis said, “The payrolls number today could be important in terms of whether it shows ongoing weakness. If we do see that, that could introduce quantitative easing speculation. … Dollar strength is going to be the big problem over the next few weeks.”

The jobs data could be good or bad — speculation is running the gamut at the moment. Credit Suisse economist Jonathan Basile said, “I would say there’s been a downshift in forward looking labor indicators that’s going to continue. We’re not going back to the 200,000 plus numbers anytime soon. Faster job growth needs people and companies to open their wallets. Higher jobless claims are another way to handicap that. The higher they go, the more it means there’s ‘risk off’ in labor decision making. … But we have gotten a run of information that’s a little bit softer from a layoff perspective and just solidifying a downshift in job growth. It’s not just information that tracks the labor market. The growth number didn’t make the grade.” A large issue at hand is the exposure companies have to international markets. Economist Stephen Stanley said, “The sources of impediments to growth really aren’t on the demand side. The biggest problem that we have right now is uncertainty. Europe is coming back to the fore again.”

At 9 a.m. (EDT), the APMEX Precious Metals spot prices were:

  • Gold, $1,584.10, Up $20.40.
  • Silver, $28.02, Up $0.18.
  • Platinum, $1,409.60, Down $10.00.
  • Palladium, $604.70, Down $9.20.
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