Gold Sinks over 4% – June 20
Gold Sinks after Bernanke statements
Gold sinks…. get it? Gold futures are off this morning and they’re off big time. At last glance, an ounce was trading at $1,313, down almost 4.5% after Ben Bernanke took to the microphone and informed the world that QE may be coming to an end this year. Global markets are literally all in the red Thursday with the Hang Seng in Asia taking the biggest beating, down almost 3% or 604 points to 20,383. Slightly behind that, the Sensex is off 499 points at the moment, down to 18,748. The Nikkei is down 230 and the Shanghai index is off 59 points.
Looking across to Europe briefly, the FTSE is currently off 137 points, the DAX is down 208 and the CAC 40 is trading 90 points lower at 3,747. It’s a red day and it’s not looking good across the financial markets.
Let’s break down plunge in gold for a moment. The sharp and we do mean sharp decline is clearly a reaction to the FED’s signal that the QE stimulus program we’ve all come to love and expect may be slowing down by the end of the year. Currently, the FED is pumping over $85 billion per month, yes, per month into bonds in what has seemed like a long journey of attempting to spur some economic growth. But if they are planning to halt or taper off this stimulus, would that not indicate that perhaps the economy is on the mend or stable enough to warrant them doing so?
In Bernanke’s speech, he made reference to the fundamentals looking better, “in partiuclar the housing sector, which has been a drag on growth” for quite some time. Still others are wondering the same question I posed above. If the economy is in good shape as the FED leads us to believe, why would they just pull the plug altogether? Why not split the current $85 billion in half and call it $40 billion, just to really be sure?
Reagardless, things are starting to get interesting on Wall Street. The dow has moved up or down in the triple digits now for seven straight days and what does that tell you? Simple, volatility is back and when it comes to volatility, it just keeps gaininig momentum. Keep your eyes peeled this week and next as gold sinks, indices plunge and yields rise. It could very well be a sign of something big on the horizon and if you’re looking to trade gold binary options, it may be an interesting time to trade the markets.