Gold prices fell again in the US, but the latest move in the world’s third-largest economy has been met with more skepticism.
The US Federal Reserve on Thursday extended its bond buying programme, meaning that it is now buying $45 billion of US Treasuries and $20 billion of mortgage-backed securities in addition to buying $25 billion of long-term government bonds.
The move was greeted by traders as a welcome relief but with some worried that the move will fuel a new bull market in the metals, which is currently in a bear market.
“The Fed will keep its bond program in place.
It was a big deal,” said Daniel St. Germain, managing director of Silver Dollar Investment Management.”
But I don’t think the Fed will really be doing anything to help the economy.
Mr St Germain also noted that investors are already losing money on gold.””
This is an easy sell for gold and a sell for the US.”
Mr St Germain also noted that investors are already losing money on gold.
“I have lost money on all my gold purchases,” he said.
Investors have also started to question the Federal Reserve’s ability to act as a lender of last resort.””
If I was not making so much money from gold, I would probably be selling my silver and gold.”
Investors have also started to question the Federal Reserve’s ability to act as a lender of last resort.
“It has been very disappointing to see the Federal reserve keep buying $100 billion of debt that it does not have the authority to make,” said Patrick Molloy, an analyst at BlackRock.
“Now that we have seen the Fed make $45bn of bond purchases in less than one month, it is hard to see them having the authority they should have to lend.”
The US central bank’s bond-buying programme, which was started in October, was seen as a way of easing pressure on the US dollar and reducing the risk of a US recession.
The price of gold rose by about 20 per cent to $1,270 an ounce, while the silver-backed US dollar fell by more than 1 per cent.
The rally was fuelled by optimism that the US economy will start to improve in the coming months, as well as by optimism in China that the country’s central bank will ease monetary policy.
The International Monetary Fund’s latest growth forecast for the world is a rebound in economic growth, and the IMF has said that China will add about 200 million people in 2018.
China’s central government said on Wednesday that it was planning to cut interest rates from 6.5 per cent in 2018 to 1 per.5 in 2019.
The Bank of England’s rate cut was the first since November and it came after the Bank of Japan cut its key lending rate to 0.5% from 0.75% last month.
In a move that was welcomed by some economists, the US central banking system has also announced a new bond buying program.
“This is not the first time we have had this kind of bond buying,” said Brian Kelly, an investment strategist at TD Securities.
“We’ve seen a lot of money coming out of the bond market and the bond markets are still in a lot better shape than they were a year ago.”
“If you’re going to be a central banker, you want to get as much out of that bond market as you can.”
While gold is gaining on the dollar, silver has gained on gold, with prices up by more in the past 24 hours than in the same period a year earlier.
The metals were on track to record their biggest one-day gains since December after rising on the back of the Fed’s bond buying.
Investors and analysts say that the Fed is unlikely to take a significant step to boost the US recovery, while other investors are not sold on the Fed and its bond-buy programme.
“They are just giving the Fed the opportunity to be aggressive in raising rates,” said Andrew Durnell, a senior US equity strategist at Morgan Stanley.
“What we don’t need is another Fed rate cut and a Fed rate hike that just makes the market less bullish on the outlook.”