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...