UPDATE: Gold Rises as Chicago Fed President Supports Bond-Buying Initiative (GLD) (SLV)

January 14, 2013 11:51 AM EST Send to a Friend
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(Updated - January 14, 2013 12:04 PM EST)

SPDR Gold Trust (NYSE: GLD) is up on the session as some speculate that the Fed might continue its bond-buying program amid recent hints that the initiative might come to an end sooner than expected.

Bloomberg quotes Chicago Fed president Charles Evans in saying the U.S. should policy "accommodative" to support recent gains in the economy.

UPDATE - Also today, San Francisco Fed president John Williams said the U.S. faces "significant risk" that growth will miss expectations and the Fed should do what it can to help the economy improve. He noted that the inflation threshold of 2.5 percent is in no way slackening of the Fed's commitment to price stability or moving up from its 2 percent long-term goal. The 2.5 percent level would give the Fed "maneuvering room," buy makes it clear that the Fed will rein-in purchases if inflation goes too high.

Williams' comments were made in a speech in California today.

On January 4th, FOMC minutes hinted that the $85 billion per month program might end in 2013, versus prior expectations of a late 2014 end.

More easing measures would devalue the U.S. dollar, making gold contracts cheaper for outside investors. Additionally, U.S. investors are likely to be hedging portfolios against market volatility with the precious metal, or possibly silver as well.

February gold contracts, the most actively traded, are up $6.7 to $1,667.3 per ounce on the Comex. The Gold ETF is up 0.2 percent while the iShares Silver Trust (NYSE: SLV) is up 1.4 percent.


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