Gold jumped to a two week high in overseas trading on Tuesday, bolstered
by reportedly strong physical interest in Asia and heightened growth
risks in the UK and Europe. The yellow metal neared the $1600 level
intraday, before easing modestly.UK industrial production and manufacturing production for January came in much weaker than expected, raising the chances that the BoE will have to act. Meanwhile, Bundesbank President Jens Weidmann cautioned that the crisis in Europe "is not over despite the recent calm on financial markets." Weidmann continues to fret about the risky moves of the ECB, but in acknowledging the "declining inflation risks" in the eurozone he may have (perhaps inadvertently) given the nod to additional accommodations.
Pimco's Bill Gross tweeted this:
Gross: ECB should ease shortly. Euro needs to decline to support peripheral countries.As we noted yesterday, the BoJ under Haruhiko Kuroda would apparently consider buying derivatives as part of its QE program. While that seems absolutely crazy, it's worth remembering that the Fed has a boat load of credit default swaps and interest rate swaps on its balance sheet. If derivatives are good enough for the Fed, why shouldn't the BoJ consider them as well?
Perpetual easy money and QEternity: A recipe to reinvigorate the underlying bull trend in gold...
