Gold & Silver Daily Market Recap: September 13th 2012

Markets rallied sharply as the FOMC announced a third round of Quantitative Easing in the form of  Mortgage Bond buying, buying $40 billion MBS monthly and to continue operation twist.
The news rallied markets across the board with spot gold jumping $25 is a matter of minutes after the news release. The metal traded to a 6 month high of $1773. Crude oil jumped more than $1, while Equities moved over higher over the QE3 announcement.

“These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets and help to make broader financial conditions more accommodative,” Said the Fed statement.

"If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability"

This is what has got gold rallying; the Feds are saying that they will continue with easing until the economy shows its improving. This puts a QE4 on the table immediately. The price action was impulsive and the market has surely priced in for further QE if the jobs market doesn't turn around with the next year.  The yellow metal is now within earshot of $1800 and within range of trading to its all time highs of $1919 before the November U.S election.

Spot silver has been seen as the biggest winner in this QE3 announcement. After months of range trading the metal has found some upside jumping to a 6 month high of $34.83 after the fed released their minutes. The gold silver ratio pushed lower and through support at 51.50, more importantly if closed below support and now looks to challenge on a close basis 50.85. The dual role metal followed the Dow higher and now looks to target its 2012 highs of $37.51.

In all this is the bullish news that the market has been sitting waiting for. With the positive outcome from the German ruling giving the Euro a push higher to 1.3000, spot gold is now looking bullish in the long term. We have extended gains and we look a little over bought at these levels so look for a retracement and buying on dips as we approach $1750.

September 13th Closing Prices