Tapering and tightening are rightly interpreted as backing out from two distinct expansionary tools. Even though those two tools have similar effects on the market interest rates, they are not viewed as equivalent.
Bernanke is trying to reaffirm us that interest rate hikes are far, far away on the horizon. No tightening is to be seen anywhere soon. But the “tapering” could happen even with a very expansionary monetary policy.
Analysts cited comments from a U.S. Fed policymaker on a likely reduction next month in the pace of asset purchases for a new one-month low in gold Wednesday morning, with prices eventually bouncing $15 from $1,262 per ounce as world stock markets also slipped.
Hedge funds cut bullish gold bets, adding the most short contracts in four weeks, as U.S. economic growth fuels speculation the Federal Reserve will trim stimulus. Holdings across commodities dropped the most since April.
September silver futures continued to impress yesterday, reaching a seven-week high. The gold-silver ratio should be closely watched at present, having been around 65-66 it is now closer to 61 as silver holds its own.
Commodity prices are on the upswing as risk appetite firms across financial markets after China took steps to boost its banks’ access to funding, injecting CNY220 billion into the system via a 7- and 14-day reverse-repo operation.