The general wholesale cost of purchasing gold has gone down below the usual $1770 per ounce during in this week’s trading in London but ardently remained less than $10 below their six-month high following the US Federal Reserve declared a third round of quantitative reduction.
The price for purchasing silver also went down to just $34.50 an ounce which was 1.3 % off after last week’s previous high as stocks and industrial commodities also edged much lower and major government bond prices went up.
Although gold will obviously remain stable and possibly test the $1790 high, many will still find an interest in buying gold but the fact remains that profit from purchases will not be an instant guarantee.
The world’s biggest gold ETF SPDR Gold Shares (GLD) for the time being saw its bullion standing firm at a notch above the 1300 tons for the first time since August last year. Expectations are still hot as the increase in the supply of fiat currencies is still a vital driver as well as the low interest rate environment is very much likely to persist in enhancing the gold’s magnetism despite the negligible opportunity cost presented. Since the beginning of the month, both the ECB and the Federal Reserve have already made announcements that they will be giving open-ended stimulus measures.
The ECB stated that it will purchase additional sovereign bonds on the open market with a no ex-ante quantitative restrictions. On the other hand the Fed will purchase $40 billion in mortgage-backed securities every month until such substantial improvement in the US market can be visibly seen and tactically felt.
Despite the recent Euro potency, still the cost of acquitting gold in Euros remained inside the 2 % margin of its spot market all-time high during this week’s jump-start trade. European finance ministers conference in Cyprus over the weekend have already agreed to delay their decision on the issue whether to allow Greece more time to come up with its austerity obligation until the issued deadline next month.
In other news, France’s finance minister stood firm with its plans for a 75 % tax rate for those who earn more than €1 million a year since France’s economic growth is still expected to remain relatively at a forecasted low below 1 % next year.
The United States in the meantime is still to protest to the World Trade Organisation regarding China’s subsidising vehicle and vehicle part manufacturing firms. The primary concern was about China’s deliberate disregard to abide by the rules of the global trading system. Should China continue to fall with deaf ears, the Obama administration will have no choice but to take deliberate action to make sure the American businesses and workers will stand at par on the playing field.