Japan, QE and precious metals
Japan has become the latest country to get on the quantitative easing bandwagon. They have joined the likes of the Fed, the Bank of England, the European Central Bank, and the People’s Bank of China as yet another central bank promising to ease monetary policy in order to provide further stimulus to its economy. Japan increased its asset purchase program by 10 trillion yen to the figure of 55 trillion yen. Despite the shift in fiscal policy, after a huge run up in prices over the last month, the precious metals are a bit heavy this morning as they take cues from other headlines and hedge fund profit taking.
The precious metals are trading in conjunction with bourses so far today. Asian, and now European, equities are seeing liquidation on the back of weak Chinese data. HSBC’s “flash” Purchasing Managers’ Index showed manufacturing activity in China contracting for an 11th month in September. Crude oil subsequently dropped on this release and brought down resource based equities with it.
Gold is consolidating nicely this week as volume wanes slightly and significant resistance still remains at $1,790. Platinum and palladium are looking more lethargic with those markets still hyper sensitive to the Lonmin mining situation in South Africa. Platinum will be looking to close above $1,600 to attract more bids.
