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Wednesday, April 25, 2012

Gold drops sharply after Fed stands pat

Did you actually expect headlines to say Gold rose sharply after Fed stands pat?  Breaking headline news and/or leading market opinions tend to be more misdirection than not.

Headline: Gold drops sharply after Fed stands pat
SAN FRANCISCO (MarketWatch) — Gold futures added to losses Wednesday as the U.S. Federal Reserve stood pat on interest rates and the accompanying statement shattered hopes of monetary stimulus. Gold for June delivery (GCM2) retreated $7.10, or 0.4%, to $1,637.80 an ounce on the Comex division of the New York Mercantile Exchange. The metal dropped as low as $1,625 an ounce after the Fed decision. “The statement clearly took QE3 off the table for an extended period,” said Bill O’Neill, a principal with Logic Advisors in New Jersey. “That was the major component in the selloff,” which also pushed oil and other commodities lower, he added. Unlike oil, however, gold had been mostly “sloppy” in recent sessions, lacking support from speculative money, O’Neill said. The Fed did mention inflation, which would be a positive for gold, but also said any bouts of inflation would be temporary. Gold has been rangebound for the better part of two weeks, unable to rise much above $1,650 an ounce and finding support at $1,600 an ounce. Tuesday’s weak housing data had spurred some hopes the Fed may be getting closer to announcing another round of quantitative easing, and gold rose 0.7% on the day. Gold is seen as a store of wealth and a safe haven; it does well amid inflation and currency concerns and any hints of quantitative easing would have pushed prices higher.
Source: finance.yahoo.com

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