"Gold is going down. The dollar is getting stronger, which is the opposite of what the Fed wants," he told CNBC. "The Fed wants a weaker dollar, negative real rates ... and more inflation. And that's good for gold."
Federal Reserve Chairman Ben Bernanke rattled markets by announcing that the Fed might start winding down its stimulus later this year and end it completely in mid-2014 if the economy improves as it expects. Markets settled down last week after Bernanke said a highly accommodated monetary policy will be needed for an extended time.
Most Fed members want to start trimming the bond purchases in September, but tapering that month is "not a done deal," Eric Green, global head of rates and foreign-exchange research at TD Securities, told Bloomberg. "Most of them want to see more evidence the job market is improving. The only way for the job market to improve is if growth shifts higher from the pace of the first half."
"Many members indicated that further improvement in the outlook for the labor market would be required before it would be appropriate to slow the pace of asset purchases,” according to FOMC minutes from the June meeting.
- Source, Money News: