“QE3 Probability” Could Boost Gold, No Need for Gold Standard “Until Money Collapses Completely”
By: Ben Traynor
Tuesday, 3 July 2012
London Gold Market Report
SPOT MARKET gold prices traded close to $1610 an ounce for most of Tuesday morning in London, after breaking through the $1600 mark during the earlier Asian session.
Silver prices touched $28 an ounce for the first time in nearly two weeks, while stocks and commodities also gained after disappointing US manufacturing data led to renewed speculation that the Federal Reserve might launch a third round of quantitative easing, known as QE3.
US manufacturing activity fell last month, according to the June ISM purchasing managers index published Monday. The ISM PMI was 49.7 – down from 53.5 in May and below analysts’ consensus forecast, which was around 52. A PMI score of less than 50 indicates contraction.
“The dimmed economic outlook leads to expectations of more stimulus, which will weaken the Dollar and help metals,” says one trader in Shanghai, adding that “silver will be relatively weaker than gold due to its industrial nature.”
“Over the last few weeks US numbers have worsened a lot,” says Eugen Weinberg, head of commodity research at Commerzbank.
“This has brought about the probability of QE3 – which is probably the most important reason for the market to believe in gold.”