Gold Jumps on Monetary Easing Announcement

Monday, 14 January 2013
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Published in United States Economy

Gold jumped back up today after Charles Evans, the Chicago Fed President, made a pretty surprising and crucial statement. Chicago Fed President Charles Evans said that further monetary easing would be necessary for now. Last week we had heard that measures may be taken to reduce the monetary easing and stimulus programs in America, but it looks like they may stay in tact for now.

"He [Evans] came out and reaffirmed that quantitative easing is in place right now, they don't see any reason why they would stop the quantitative easing at the moment," said Phil Streible, senior commodities broker at RJO Futures. "Remember, we need to get growth continuously above 2%, we also need to get the unemployment rate down near 6% in order for them to pull off the throttle of QE."

This apparently was welcomed news by most investors, as it helped gold jump by double digits today to start out the week. How long these monetary measures will stay in place wasn’t announced, but at least it helped ease the mind of most investors at a time when the fiscal cliff fighting is about to begin again.

Gold for February delivery jumped up by $11.80 to come in at $1,672.40 an ounce at the Comex division of the New York Mercantile Exchange. Gold price traded as high as $1,674.80 and as low as $1,659.50 an ounce, while the spot price of the yellow metal increased by $4.50. Overall it was a very nice trading period for the yellow metal to start the week.

Evans remarks came Monday at a forum in Hong Kong, where he said that monetary stimulus would continue until the economy created 1 million to 1.5 million jobs during a six-month to 12-month span. The Wall Street Journal was the first to report this news.

Fed Chairman Ben Bernanke is still scheduled to speak today at the Gerald Ford School of Public Policy at the University of Michigan after equity markets close. While the above statement have not yet been made by Bernanke himself, it is thought that these sentiments will be shared by him as well, as he will announce monetary policy to stay in place for now.

Gold may enjoy somewhat of a rebound throughout this week, especially if Bernanke gives a little more information on what we can expect for the future as far as monetary easing timelines.

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Jeremy Holcombe

Jeremy is a seasoned finance writer who has been studying the gold and silver industry for many years. His vast knowledge in the precious metals sector led him to Goldco Direct, where he is now one of their most recognized writers both on the site and around the web. Along with being a senior Precious Metals writer for Goldco Direct, he is frequently featured on many financial sites on the internet where they tap into his knowledge about gold. Jeremy is passionate about educating investors about the yellow metal as its price continues to rise to record breaking levels.