Wholesale Gold Prices fell below $1,630 per ounce Friday morning in London, their lowest level since last August and 3.3% below where they were 24 hours earlier, after Federal Reserve minutes suggested some policymakers see a case for ending quantitative easing this year.
Gold, stocks and bond prices plunged on Thursday after the release of the December FOMC minutes, which revealed that QE3 could end this year. Given the current unemployment rate is still well above the 6.5% threshold, it is unlikely for the Fed to end the QE3 anytime soon.
With the return of Shinzo Abe and his Liberal Democratic Party to power in Japan, the market for U.S. Treasuries may be losing its last external pillar of support. This is significant to the global economy as Japan is the largest foreign power left with a strong appetite for U.S. Treasuries.
If anyone thought that Friday's heart-stopping $100+ free-fall in gold was, well,... heart-stopping, they had better be thankful that they were asleep overnight, as the yellow metal fell some $130 and touched the $1,531
Well, the Fed left the wet rabbit of liquidity at rest in the top hat yesterday, and, boy, did the markets throw a tantrum about that! Pretty much everyone ducked pretty much anything they had bought before.