The Bank of Japan announced Fed-like open ended quantitative easing overnight, which had been widely expected. Although this provided no immediate effect on the markets, since the move had already been priced in, it is more fuel for the global currency devaluation fire, with nations already accusing one another of “currency warfare.”
In Europe, German economic indicators and consumer sentiment rose, and Spanish bonds sales continue to improve. However, rumors of trouble at an unnamed German bank sent stocks the the euro lower, proving how fragile the EU economic recovery remains.
U.S. stocks are trading down from the previous close in thin trading, which is causing extra volatility. Gold experienced a short sell-off this morning in some profit taking, but quickly recovered half of the drop. Silver was hit twice today, once before the New York open, and again about the time of the morning gold retrenchment, but is fighting back in very volatile action.
TD Securities says that speculators have positioned themselves in anticipation of a gold rally, and that “gold could surge sharply given a catalyst.” They suggest that bad economic news, debt negotiation brinkmanship, or a dovish monetary policy announcement by the Fed could all provide the needed spark.