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Headwinds in the Gold Market
Pinnacle Digest writes: This latest article from Bullionvault.com addresses the many headwinds in the gold market.
It appears that the only person who is capable of changing the course gold takes is Ben Bernanke himself. And after a rather uneventful speech to congress yesterday, gold bugs were greatly disappointed in what Mr. Bernanke had to say.
"The bull camp in gold wanted to see more quantitative easing," says a note from CME Group.
Unfortunately for gold investors, Bernanke made no inclination the further easing would be implemented. In fact, Bernanke mentioned that monetary policy adjustments were coming to an end. He asserted that in order for the economy to build momentum, fiscal policy needed to be addressed. Bernanke stated "What will be needed to make it more effective is that fiscal issues need to be dealt with."
Bernanke was likely referring to the extension of the Bush tax cuts and addressing the rising debt ceiling. Without a straight-forward plan on these two issues, the market and economy will remain in a state of uncertainty, which will slow investment and hurt the employment rate.
With that said, if the economy slows further, Bernanke may be forced to step in and provide further easing (whether congress and the White House get their act in order or not). Further easing, obviously, would have a hugely positive impact on gold prices.
While the US attempts to address its economic problems, China is making big moves in the gold market. In addition to becoming the world’s largest consumer gold market, China is attempting to enable banks to trade gold and silver contracts over-the-counter through market makers rather than through exchange pricing on the SGE.
This would add tremendous liquidity to the gold market and further expand China’s dominance in the sector.
Click here to read the full article.