In my previous post, US Consumer confidence is high, what’s next? The focus was on US confidence data and oil prices. However, the focus for Feb 29th was different.
Amidst the news released for Europe’s 2nd LTRO, US GDP 2nd estimate of 3%, better Chicago PMI data, am I correct to say you would expect that the US indexes would have surge north? Not so fast!
At point of writing and after Fed Reserve Chairman’s testimony to Congress, my opinion is that the speculation for another round of quantitative easing to stimulate growth was seen easing. This is the focus. And the US dollar strengthens.
As previously mentioned, the obvious primary beneficiary to additional QE is gold. And I was not surprised that Gold plummeted by 4.29% or US$ 76 to US$ 1711.70 at point of writing.
Unless the yellow metal changes its characteristics, and as long as QE is not on the table, I doubt there will be a rally in Gold amidst the speculation of most Gold Gurus; US$ 2000 and above. I would say FAT hope for the time being. I would stay away for the time being.
Black Gold as they were to call oil in the good old days also lost about 1% to US$ 104.90 thereabouts as a result of a stronger US dollar.
For the benefit of new audience, Gold had rallied back from US$ 1500 thereabouts to a current high of US$ 1790 as a result of hopes and expectation that the US Fed would provide additional monetary stimulus. While QE was on the table, the US economy got stronger and stronger. Gold got stronger as hopes for QE was still very high! But when the Fed Chairman did not hint any QE in his testimony tonight, the obvious had to occur.
I am not sure how the US indexes would end tonight but at least there’s some growth recorded for the month of February.
Tomorrow is a new day and the highlights for Asia would focus on China’s PMI and Fed Ben Bernanke (2nd day) testimony to the Senate Banking Committee.
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