Fed and BoE: QE still the order of the day

SAN FRANCISCO (Aug 7)  Today’s AM fix was USD 1,275.50, EUR 960.61 and GBP 838.04 per ounce.   Yesterday’s AM fix was USD 1,292.00, EUR 972.97 and GBP 840.38 per ounce.

Gold fell $17.80 or 1.37% yesterday and closed at $1,283.60/oz. Silver fell $0.16 or 0.82% and closed at $19.52. 

Gold continued losses into a third session after comments by a Dallas Fed official ramped up fears that the U.S. Fed could begin tapering soon. Today, the governor of the Bank of England unveiled a Fed-style forward guidance.

Yesterday, India's largest spot commodity exchange was shut down as regulators investigate possible trading violations. This had no impact on global gold bullion

Richard Fisher, the Dallas Federal Reserve President was first out of the blocks on Tuesday and he was followed yesterday by Charles Evans, the Chicago Federal Reserve President, who reiterated Fisher’s sentiments by indicating that the better than expected economic and labor market data in the U.S means that the Fed might introduce tapering as early as September.

Evans, who is one of twelve Federal Reserve Presidents, believes that the economic indicators “are actually really better” and this signals a new, firmer indication from the Fed that tapering is going to happen.

The 12 Federal Reserve Banks are - 1st District: Boston, 2nd District: New York, 3rd District: Philadelphia, 4th District: Cleveland, 5th District: Richmond, 6th District: Atlanta, 7th District: Chicago, 8th District: St. Louis, 9th District: Minneapolis, 10th District: Kansas City, 11th District: Dallas, 12th District: San Francisco.

Observers of the Fed will be watching closely what the next Federal Reserve President will say. With two of the 12, who have opposing views on QE, already pitching tapering there is no reason to doubt that those that follow will not read from the same page. The ‘gentle’ introduction of tapering is being orchestrated alongside the selection procedure for the next chairman of the Federal Reserve, an appointment in itself that will affect the price of gold and all other commodities.