Daily Archives: October 4, 2011

Claire Jones

Ben Bernanke

Ben Bernanke. Image by Getty.

Ben Bernanke, US Federal Reserve chairman, is testifying before Congress. All times are London time; Washington, DC is five hours behind.

Mr Bernanke is expected to field questions on Operation Twist, the FOMC’s other policy options and the state of the US economy.

 

 

17.43 This live blog is now closed. Follow FT.com for more on the testimony.

17.39 The key takeaways.

Markets have focussed on the Fed chairman’s comments that the FOMC is “prepared to take further action”.

But, while the testimony was undoubtedly downbeat on the prospects for growth, there was little on the US economy or monetary policy that Mr Bernanke had not already said, either in his Jackson Hole address or in his speech in Minnesota last month. He also signalled that, while QE3 was not “off the table”, neither was it imminent: “We have no immediate plans to do anything on that.” Read more

Claire Jones

Operation Twist has left gold bugs with little to shout about.

Since expectations of QE3 began to dwindle in early September, gold – long a hedge against currency debasement – has fallen to as low as $1,600, 16 per cent below its high.

Though talk of Operation Twist was the trigger, the plunge was worsened by investors cashing in on their gold in order to make up for shortfalls elsewhere. That is perhaps more disturbing than the fall itself – that gold can no longer be seen as the perfect hedge against volatility.

Both factors will weigh on demand from central banks’ reserve managers, who have helped drive up the price in recent years.

An additional concern for central banks is that gold is a very public investment; big purchases are usually broadcast. A fall in price would make them think twice about buying on the basis of fears that a further fall would prompt a raft of negative PR.

But there are also reasons to think demand will remain steady. It could even rise. Read more