“Campaign Against Gold Has Failed” Says Central Bank Think-Tank, Rally fades in Gold and Silver
By: Ben Traynor, BullionVault
Friday, 11 January 2013
London Gold Market Report
WHOLESALE gold bullion prices dipped back below $1670 an ounce Friday morning in London, 0.9% up on where it started the week, after jumping 1% yesterday following the European Central Bank’s decision to leave interest rates on hold, which was also followed by gains for the Euro.
Silver meantime drifted back below $30.70 an ounce this morning, while stock markets were little changed and commodities edged lower along with US Treasury bond prices.
Gold bullion could form part of “an immensely important phase in the history of world money,” according to a report published today by the World Gold Council and produced by the Official Monetary and Financial Institutions Forum.
“Western economies have attempted to dismantle gold’s monetary role,” the report says,”[but] this has failed.”
In the US, the Federal Reserve’s policy of holding interest rates at near-zero for a prolonged period “may substantially increase the risks of future financial imbalances,” said Federal Reserve Bank of Kansas president Esther George yesterday, adding that it could also “hamper attainment” of the Fed’s 2% inflation target.
The Fed has targeted a Federal Funds Rate of 0.25% or lower since December 2008, and last month said its policymakers expect this rate will remain appropriate until unemployment falls to 6.5%.
In recent months the Fed has also committed to buying $85 billion of US Treasuries and agency mortgage back securities each month “to support a stronger economic recovery”, although these purchases have not as yet been linked to any target variable.
“Attempts to also put thresholds on the timing of asset purchases may be a bridge too far,” St Louis Fed president James Bullard said Thursday.