Stock markets and gold have rallied, while the dollar has fallen, as markets anticipate further stimulus measures by the US Federal Reserve.
European markets rose 1%-2% in morning trading, while gold hit a new record.
The Fed's chairman, Ben Bernanke, is widely expected to discuss further stimulus actions at a keynote speech in Jackson Hole, Wyoming, on Friday.
This may involve more "quantitative easing" - buying up US debt to inject more cash into the financial system.
The Fed has already carried out two rounds of quantitative easing (QE), to stabilise the 2008-09 financial crisis, and more recently to boost the flagging recovery.
Earlier this month, the US central bank also took the unusual step of saying that it expected to keep short-term interest rates close to zero until 2013.
The second round of QE and the interest rate commitment were hinted at by Mr Bernanke when he spoke at last year's Jackson Hole gathering of central bankers.
Dollar vs gold?
The price of gold briefly rose above the $1,900 an ounce mark for the first time during Asian trading hours, setting a new all-time high of $1,913.50.
Gold, which is viewed by investors as a haven investment, has been boosted both by anticipation of QE - which is expected to erode the value of the dollar - as well as recent signs of weakness in the US and European economies.
"If they push through with more stimulus, gold could rise even further," said Colin Whitehead of Fat Prophets.
He explained that a fresh stimulus package would mean that the US would have to print more money to boost liquidity in the markets, which in turn could see the US currency weaken further.
"The underlying driver of gold prices is the depreciating US dollar value," he said, "so the more money they print, the stronger gold gets."
However, following the open in Europe, stocks rallied strongly, while the gold price fell back somewhat, with the London morning price fixing at $1,886.50 an ounce.
Analysts say that the previous round of QE boosted share prices, as investors sought to reinvest the cash received in return for debts sold to the Fed.
Meanwhile, the dollar fell against most currencies in Tuesday morning trading.
The euro rose 1.2 cents to $1.448, though some of the gains were due to industry surveys that revealed that eurozone manufacturing and services were not performing as badly as expected.
Libya uncertainty
Meanwhile, oil prices also rose in Tuesday morning trading, because of continued fighting in Libya and expectations that official figures will show a decline in US crude stockpiles.
Brent was up 25 cents to $108.61 a barrel, while US light crude advanced 87 cents to $85.58.
"It could take months before oil can start to flow again from Libya," said John Vautrain, oil analyst at energy consulting firm Purvin & Gurtz.
"I think there was a lot of euphoria on Monday. But the whole country is not completely pacified yet and we don't have an organised government. A lot is lacking."
( source : http://www.bbc.co.uk/news/business-14625918 )
No comments:
Post a Comment