Gold Retreats as Dollar Remains Underpinned
Gold fell to a new low for the week in early
Pressure mounted in the wake of a troubling rise in
The dollar is also getting help from a falling yen, which is being weighed by rising pressure on the BoJ to heap additional accommodations on top of the already rather extraordinary measures in place. Shinzo Abe, head Japan's Liberal Democratic Party, called on the BoJ to implement "unlimited easing" until inflation hits 2% to 3%. Mr. Abe may well end up being
Here in the
El-Erian makes note of the "worrisome signal" that other policymakers (presumably Congress) are "essentially missing in action" and in fact "again playing Russian roulette with the economy." The Fed may simply feel they have no choice, but to act once again.
Also weighing on gold was a report from the World Gold Council that showed a 16% Q3 decline in demand for the yellow metal, versus record Q3 demand last year. Interestingly though, the price of gold rose 11% in Q3.
The latest pullback may be a bit of a gift, because the underlying fundamentals that have proven to be supportive to the gold market certainly haven't changed. I suspect the downside potential is limited here.