Bullion on track for its biggest weekly gain in 2 years after falling just short of $1,300
"Gold cut some earlier losses on Friday and was on track for its biggest weekly gain in nearly two years," Reuters reported. The metal made a powerful run toward $1,300 but failed to surmount that key level. It's still holding strong near $1,280 by midday Friday.Still, the mood toward gold has changed somewhat after Wednesday's ultra-dovish speech from Federal Reserve chief Ben Bernanke, in which he pledged "highly accommodative" monetary policy for the "foreseeable future."
Here's what some market players have been saying about Bernanke's speech as well as the June Fed minutes that were released just hours before his talk before the NBER in Boston on Wednesday:
1) "A lot of folks out there had been talking about Fed buying less bonds starting from this September. That's why the Fed minutes really caught everyone off guard." -- Anonymous Hong Kong metals trader
2) "I think that a degree of caution by the Fed is now likely to replace the rather optimistic picture that was implied in May and June, as the economic recovery is not quite clear cut as previously thought." -- Jonathan Butler, Mitsubishi
3) "We presume that the strong reaction of the precious-metal markets is also related to the fact that investors believe that the Fed's actions and attitude do not differ significantly from those" of the European Central Bank or Bank of Japan. "This is likely to prompt investors to increasingly seek a 'safe haven' and a currency that is independent of the central banks, thus again luring in buyers of gold." -- Carsten Fritsch, Commerzbank
4) "Sentiment will now be to the upside and the market will be looking for an attempt on $1,300." -- David Govett, Marex Spectron Group
5) "If the economy is so fragile that the government cannot allow failure, then we are indeed close to collapse." -- Seth Klarman, Baupost Group
6) "Bernanke was quite dovish in his comments. Maybe we won't see a pullback in quantitative easing as quickly as we anticipated. We are likely to see a short-term rally in gold up to around $1,400 and then a fall back to current levels." --Amber MacKinnon, Nomura Securities
7) "Bernanke's speech was the key driver for an aggressive dollar sell off overnight. The immediate reaction was for investors to run for the exit door of their long dollar positions." -- Lee McDarby, Investec Corporate Treasury
8) "The Fed minutes stabilized markets, then we really took off when Bernanke spoke -- he sounded more dovish than the minutes. It's swinging the pendulum from an imminent cessation of easing to one where we're not sure if he's going to pull the trigger in September." -- Ed Meir, INTL FC Stone
9) "Clearly, Ben Bernanke's comments turned the market. He went beyond what people expected." -- Bill O'Neill, Logic Advisors.
10) "We don't believe the Chairman's intentions have changed. Regardless, the Chairman's credibility is once again damaged. If the Dollar breakdown continues, it will be a sign that the market believes the Chairman has again lost control over policy. The asset clearly in the best position in such an environment is Gold. After such a notable correction in the past nine months, the precious metal once again becomes a very attractive global asset if monetary policy in the largest economy of the world spins out of control." -- Mike O'Rourke, Jones Trading
11) "Gold got a boost after Bernanke gave the impression that tapering is currently a distant dream. Today's data further cements the fact that the economy has not completely recovered." -- Carlos Perez-Santalla, Marex North America
12) "Everybody's hanging on the Fed's every word. Even though Bernanke's comments after the last FOMC meeting really weren't hawkish, the market has wanted more clarity in terms of what he meant. Bernanke was as clear as one can be, saying 'We're not going to step on the brakes. We're just going to let up on the accelerator.' The more dovish comments he made yesterday clarifies that position." --Malcolm Polley, Stewart Capital Advisors
13) "This is probably a historic day for the gold price. With the $1,275 barrier broken we are back on the way up." -- Jim Sinclair, Tanzanian Royalty Exploration Corp.
14) "We are going to see a range of $1,200 to $1,300 for the short term, and trade may stay pretty volatile after the Fed has walked a fine line with withdrawing QE at the right pace. There is also a lot of division within the Fed in terms of what the best approach towards bond-buying tapering is, so we may see the market jumping around as a result of that." --Daniel Smith, Standard Chartered
15) "Everyone realizes that Fed policy is going to remain extraordinarily accommodative. The market has adjusted to this and we're back to where we were prior to the Fed's announcement of what was really a very subtle shift in policy."-- Hank Smith, Haverford Trust Co.
16) "Of the Bernanke Twins, we got the dovish one last night, and this helped a gold market that was already rallying. But whether tapering is September or December, gold has to get used to life without QE (quantitative easing) sooner or later." -- Matthew Turner, Macquarie
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