Even as pure play investors and investment companies look forward to Jackson Hole speech, what does it mean if Bernanke says there is no stimulus?
“It could mean two things. Either the Fed reading the writing on the wall is positive about growth prospects of US economy, or it is trying hard to hide something.” said Martin Patrick, a Kochi based economist from South India.
The Federal Reserve, by postponing a stimulus, would be feeling comfortable about the recent data. He added.
“But if they postpone it could also be that something is wrong about the treasuries. This, however, we may have to dig deeper. By not announcing a stimulus, either they are postponing a U-turn or they are hiding something about the state of the economy. If the latter is the case, it would be a case of political motives overriding economic motives”he said.
The Bernanke speech is widely awaited as traders and investors have seemingly abandoned the precious metal markets.
Gold is stuck in tight range of 30800-31000 before Fed speech scheduled for tomorrow, according to Amrita Mashar, Manager- Research, Commodity Online.
“Traders seems to be absent in market ahead of Federal Reserve Chairman Bernanke Speech.” she said.
A QE 3 may be expected as election in US looms and the government seeks to impart some momentum to the current U-turn the economy has taken, Martin Parick had said recently.
“The government would want to create a feel-good ambience in the country.” he said. “The Jackson Hole speech could see Bernanke announcing a QE3 worth $300 bn”, he added.
The measure, if carried out would drive precious metals higher.
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