Gold News

Fed says nothing, makes gold traders spit

The US Fed chose to do nothing to Dollar interest rates yesterday, noting instead that the US housing slowdown is "substantial", but the risk of inflation remains.

"It's as good as not saying anything," spat a Hong Kong gold trader. And matching the Fed's indecision, gold has gone nowhere in today's Asian session.

What could the Fed's indecision mean for US rates in the New Year? Sticking at 5.25% for the fourth time running has led bond dealers to expect a cut by March, according to Bloomberg.

"The slowdown in housing and the Bernanke Fed trying to prove its mettle against inflation are the ingredients for lower interest rates and a good year for bonds in 2007," says one bond-fund manager. And since the Fed's announcement, 10-year US Treasury prices have risen and pushed yields down towards a new low for 2006 at 4.49%.

Cutting interest rates would only invite more debt, of course...restoking the housing bubble...and risking the very burst of inflation that Ben Bernanke seems so desperate to fight off. What would that mean for the price of gold? Click here to read more...

Adrian Ash is director of research at BullionVault, the physical gold and silver market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and is now a regular contributor to many leading analysis sites including Forbes and a regular guest on BBC national and international radio and television news. Adrian's views on the gold market have been sought by the Financial Times and Economist magazine in London; CNBC, Bloomberg and TheStreet.com in New York; Germany's Der Stern; Italy's Il Sole 24 Ore, and many other respected finance publications.

See the full archive of Adrian Ash articles on GoldNews.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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