2012-07-19

QE3 Unlikely to Arrive Until Early 2013

The gold price slipped $5.64, or 0.4%, to $1,576.46 per ounce on Wednesday as investors digested the second day of Congressional testimony by Fed Chairman Ben Bernanke.  The spot price of gold fell to $1,567.38 earlier this morning, but recouped the majority of its losses as the U.S. dollar pared its gains against a basket of foreign currencies.  Nonetheless, the gold price remains near the lower end of the trading range it has occupied since early May.

George Gero, precious metals strategist at RBC Wealth Management, noted that he was not expecting Bernanke to discuss QE3 because of the nature of the Congressional hearings.  “I don’t think that this is the platform when he will usually say something that is going to be unusual or dynamic.  Basically he’s testifying, which means he’s answering questions.”

Looking ahead, several strategists expect the price of gold to remain range-bound.  Analysts at Marex Spectron wrote in a report to clients that “No doubt, the gold bulls will seize on the fact that further stimulus is not off the table, but it is not going to happen for a while, if it ever does, and as such the upside for gold remains limited to my mind. We are still in the same ranges.  I see no reason for the time being for that to change. The market remains thin, with low volumes and no real interest.”

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