Gold should benefit from continued ultra-loose monetary policy of the Fed

Gold should benefit from continued ultra-loose monetary policy of the Fed


via Commerzbank

The US Federal Reserve left its appraisal of the US economy virtually unchanged yesterday. What is more, the Fed will continue to run its asset purchasing programme at the same pace until such time as the situation on the US labour market improves more convincingly. Fed Chairman Bernanke gave no clear indication of any end to “QE3”. Gold should thus continue to find support from the Fed’s ultra-loose monetary policy and continue to gain. Furthermore, market players are likely to be watching extremely closely how the situation in Cyprus develops. As a safe haven, gold would benefit if the cliff-hanger situation were to continue for any length of time. In today’s “Commodity Spotlight”, we shed light on the reasons for the recent strong outflows out of the ETFs. In our opinion, they are primarily due to hedge funds and investment advisors switching from gold to equities. 
The European Automobile Manufacturer’s Association (ACEA) recently published the sales figures for February. They show that new car registrations in the EU fell by 10.5% year-on-year to 795.5 thousand units, giving rise to the poorest February figure since records began. In Europe as a whole, new car registrations likewise dropped by more than 10% to 829.4 thousand units. Four of the five largest European car markets thus saw sales decline, in some cases sharply, last month. Given the uncertainties and unstable economic situation, it could take several months before car sales recover in Europe. On the demand side, this is likely to somewhat dampen the increase we expect to see in the price of platinum.