by Jan Skoyles, TheRealAsset.co.uk
Whilst signs of a December taper will be hunted for, they will be possibly be elusive, partly as Bernanke will be unlikely to dramatically change monetary policy in his last month. A January taper may also be unlikely as Yellen assesses the Fed’s monetary policy.
Given the change in Fed Chairperson, the events since the last FOMC meeting and the improved data readings, gold market speculators are seemingly hesitant to be too aggressive in their gold trades prior to seeing exactly what the FOMC plan to do. The market is, however, hypersensitive to any hints or suggestions that tapering may happen earlier than expected.
The view that tapering is bearish for gold is somewhat short-sighted. It may well be initially, but in the long-term it will be bullish. Tapering indicates the economy is getting better, which suggests disinflation is no longer a worry, however this paves the way for inflation – a positive environment for gold.
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