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Gold Higher As Investors Seek Safe Haven
Posted April 10th, 2014
TANGIBLE INVESTMENTS - Los Angeles - by James O'Dell - Gold and silver prices rose on Thursday with gold hitting a two week high of $1,324.00 an ounce while silver jumped to $20.13 an ounce, as the Dow plunged nearly two hundred points and the dollar fell in the wake of the release on Wednesday, of the minutes from the Fed's March policy meeting. The release of the minutes has helped allay investor concerns that a rapid increase in interest rates will occur after the central bank's quantitative easing (QE) program ends sometime in the fall.
The minutes "eased concern from market participants that the Fed is on a set course to pull back before the economy is ready," said Phil Orlando, of Federated Investors. "It changed the dynamic of the gold market because now the fear of Fed raising rates has been pushed back further into the future," said Phillip Streible, senior commodities broker at RJ O'Brien.
The minutes clearly indicate that policymakers want investors to follow the official policy statement, and not the dot charts, for a better signal as to the likely path of rates. One reason the dot charts are confusing is because 16 Fed officials are represented in the charts, but only nine members will vote on policy.
Chicago Fed President, Charles Evans, spoke to that issue on Wednesday, admitting that there were "some serious flaws" with the dot charts due to each policymakers' very different policy assumptions. Fed Chair Janet Yellen weighed in on the issue during her post-meeting press conference, saying that the "dots" are not the Fed's preferred method for communicating policy.
Meanwhile, with Russia now gouging Ukraine with skyrocketing gas prices and unrest growing in the country’s east, Ukraine's struggling currency, the hryvnia, has hit an all-time low. The hryvnia dropped 3 percent to just 12.15 per dollar, bringing the currency's decline to 32 percent, and making it the worst performing global currency tracked by Bloomberg. The yield on the nation's debt due April 2023 also rose seven basis points to 9.52 percent.
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