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Gold Rises on Global Stimulus Speculation
In the latest article from Bullionvault.com, gold’s rise this week is addressed and credited mainly to further belief that the ECB will once again buy sovereign bonds (particularly for Spain and Italy). Gold continued to rise this morning after Germany’s chancellor, Angela Merkel, made a statement in Canada that appeared to endorse Draghi’s comments last week. It was last week when Draghi stated that the ECB will do “whatever it takes” to preserve the euro. The market took Merkel’s comments as evidence more ECB bond purchases are coming in the near future.
While Merkel stopped short of definitively supporting immediate bond purchases by the ECB, her typically stern and cold attitude towards the subject has softened. With that stated, we don’t believe Germany will support further bond purchases without proper measures being put in place to guarantee sufficient austerity measures will be implemented.
Over in the US, The Fed is keeping its comments to itself as further QE is in doubt. While the inner-ranks of the Fed seem divided on the subject, with the Philly Fed clearly against QE and the San Fran Fed clearly for it, Bernanke has made no comments on the matter of late – nor have any political figures.
In China, premier Wen Jiabao has boldly announced that the government is ready to act and has sufficient ammunition to make sure the country hits its growth target for the year.
Click here to read Bullionvault.com’s entire article on what is driving gold’s price.