imo there's a 50/50 chance that ccu will be back in the high 60's. i still like ccu better than any share on the asx.
imo qe3 will be linked to preventing the iranian's from further enriching uranium and / or securing wmd in syria!
Precious Metals, Other Markets To Take Cue From Bernanke Speech Friday 30 August 2012, 8:09 a.m. By Allen Sykora and Debbie Carlson Of Kitco News http://www.kitco.com/
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(Kitco News) - Precious metals—as well as other commodities and equities--are likely to pull back if Federal Reserve Chairman Ben Bernanke does not strongly signal further monetary-policy easing Friday, and conversely these markets could resume their recent upward trend if the Fed chief should send the message that more accommodation is on the way.
All eyes will be on Bernanke when he delivers a highly anticipated speech to an annual Fed symposium in Jackson Hole, Wyo., scheduled for 8 a.m. MDT, or 10 a.m. EDT. Minutes from the July 31-Aug. 1 meeting of the Federal Open Market Committee showed a dovish Fed, since they said “many” members would favor further easing if the economy does not improve substantially “fairly soon." Gold and other commodities got a lift from the news on hopes Bernanke would pave the way for further easing this week and/or the FOMC undertakes more stimulus at a mid-September meeting.
But as the Bernanke appearance approaches, many economists and strategists are questioning whether the Fed chief will offer any overly aggressive hints so soon. They cite improved U.S. data since the July 31-Aug. 1 meeting, ideas the Fed will want to see the August jobs report next week before tipping its hand, and maybe even a desire to hold off to save some firepower in case economic conditions worsen (see related story).
“If he strongly hints at a new round of quantitative easing or some sort of strong non-conventional monetary policy intervention, markets will likely rally,” said Bart Melek, director of commodity strategy, rates and foreign-exchange research with TD Securities.
Gold benefits from lower interest rates since they increase the potential for inflation whenever the economy recovers and due to weakness that might be expected in the U.S. dollar. Further, low rates mean a low so-called “carry cost” for gold, which is the earnings somebody would otherwise miss out on by not holding a yield-bearing asset.
Easing likely would help other commodities and equities on hopes that it would help speed up an economic recovery.
“If he doesn’t say anything, there is (likely to be) a bit of sell-off because we priced in something more positive than that,” Melek said. “And of course if he says ‘no way, no how, we’re not doing it’…then we get into a sharper sell-off.”
A retreat in precious metals especially could be expected in the absence of any strong signals from Bernanke since some traders have established long positions lately on hopes for more easing. This could prompt some traders to exit those positions, and still others might sell, or go short, in an effort to profit on any short-term downtick.
“If no developments are made, we will almost certainly see a pullback across the precious,” said Alex Thorndike, senior trader for precious metals and forex with MKS Capital. Gold hit “overbought territory” recently based on the Relative Strength Index. And, with exchange-traded fund holdings hitting a record high and the number of speculative longs much higher than a few weeks ago, “the risk is certainly to the downside,” Thorndike said.
The most recent positioning data from the Commodity Futures Trading Commission showed that the large non-commercial accounts, commonly referred to as the funds, were net long by 140,126 lots for futures and options combined as of the most recent reporting deadline of Aug. 21. This was up 36% from four weeks ago.
Sean Lusk, precious-metals analyst with Ironbeam, also looks for a downturn in gold if Bernanke doesn't show his hand, perhaps retracing to $1,650 and, should this fail, to $1,630.
“Every time they've talked and they don't say something good, gold's taken a dive,” Lusk said. “I'm really not expecting much from it. If he just says what he usually says, that we'll be there if the economy needs us, if economic conditions warrant and we have tools, then we'll break. There's a lot already priced into this rally.” HSBC analyst Jim Steel recounted that gold has been sensitive to prospects for Fed policy all year. The most-active Comex December contract climbed to $1,800.90 on the final day of February, fell to the $1,530s by May after a series of stronger jobs reports and Fed speeches reduced QE hopes, then climbed as jobs data weakened again, with the metal hitting a four-month high of $1,679.30 early this week.
“Gold rallied sharply in January on indications from the Federal Open Market Committee meeting that further easing was on the way but retreated from the end of February when Mr. Bernanke and subsequent FOMC meetings distanced the Fed from further easing until earlier this summer,” Steel wrote in a research note to clients. “More recently, gold has recovered on renewed ideas of additional Fed easing, based largely on data showing the economy is slowing. Gold prices could correct, possibly abruptly and steeply, should Mr. Bernanke’s speech again hint of distancing the Fed from further monetary policy easing.”
Equities Also Already Factored In Some Easing Hopes The equity market will also be closely parsing Bernanke’s comments Friday. If he hints the Fed won’t do anything in September, traders may scale back on risk-on trades, said Andrew Busch, global currency and public-policy strategist with BMO.
“We may see the equity markets drop a couple of percent or so,” he said.
Still, any retreats ultimately may be limited since economic data has tended to be stronger than expected over the last month or so, he added. “While things don’t look very good right now, the current trajectory looks OK,” he said. “That’s more supportive of equity markets.”
Alan Bush, senior financial futures analyst with Archer Financial Services, said a rally in stocks over the past couple of months has been on the likelihood of another round of quantitative easing. Further, he cited a recent Reuters poll showing there is a 45% probability that the FOMC will announce easier credit conditions at the conclusion of the Sept. 12-13 policy meeting.
“The risk on Friday is to the downside,” Bush said. “There’s so much factored into the idea of another QE that any backtracking, any vagueness by Bernanke would be very negative for the market. Stock-index futures would fall, (interest-rate) yields would rise temporarily on the idea the easier credit is delayed. The U.S. dollar would rise. But I think that the U.S. dollar has additional strength on flight to quality.”
CCU Price at posting:
71.8¢ Sentiment: ST Sell Disclosure: Not Held
