Market Watch: Gold Prices Rise as the Fed Announced the Start of a 'Massive' Bond Buying Program

Article by Myra P. Saefong in The Wall Street Journal Market Watch

Gold futures rose Monday, looking to post their first gain in three sessions, finding support as the so-called “phase one” of the U.S.-China trade deal reportedly hit a snag and after the U.S. Federal Reserve announced last week that it will start expanding its balance sheet next week.

“The focus on Friday was on the China-U.S. trade deal, which appears to be in limbo pending further talks,” Peter Spina, president and chief executive of GoldSeek.com, told MarketWatch.

Wariness over the strength of an agreement hammered out between the U.S. and China last week was growing on Monday after a report that Beijing will insist on more talks with the U.S. before signing any such deal.

As big as the trade talks news was on Friday, it was “a giant distraction from the real news,” said Spina. “In a very quiet and sneaky way, the Federal Reserve announced the start of a massive bond buying program.”

The Fed, in a surprise announcement, set in motion a plan Friday to ease unexpected strains seen in short-term money markets last month.

“I believe fund managers and investors are going to have time this weekend and this week to digest this very secretive-like news from the Fed on this massive debt monetization scheme,” said Spina, noting that he does not see gold falling below $1,450, “where excellent support exists and instead, gold should be working through this consolidation phase which will take it to record levels in the coming several months.”

To read this article in Market Watch in its entirety, click here.