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Oct. 14, 2019, 2:08 p.m. EDT

Gold ends higher as the Fed announced the start of a ‘massive’ bond buying program

Doubts emerge about U.S.-China trade deal

By Myra P. Saefong, MarketWatch


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Gold prices end higher on Monday

Gold futures rose Monday 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.

‘In a very quiet and sneaky way, the Federal Reserve announced the start of a massive bond buying program.’

Peter Spina, GoldSeek.com

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.

Read more: Fed says it will start to buy Treasury bills next week to ease money-market pressure

On Comex, December gold (NYM:GCZ19)  climbed by $8.90, or 0.6%, to settle at $1,497.60 an ounce after posting its lowest finish month to date on Friday.

Despite the size of the bond buying program, “the Fed does not wish for us to refer to it as quantitative easing or QE4,” said Spina. “Yet, this is exactly what the Fed is doing but due to the timing and enormity of the program.”

“I believe fund managers and investors are going to have time...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.”

“Right now it is a question of timing,” he said.

Rounding out action in Comex metals, December silver (NYM:SIZ19)  added 16.6 cents, or 1%, to $17.71 an ounce, while December copper (NYM:HGZ19)  added just over half a cent, or 0.2%, to $2.634 a pound.

January platinum (NYM:PLF20)  fell by 90 cents, or 0.1%, to $899.40 an ounce, while December palladium (NYM:PAZ19)  rose $16.90, or 1%, to $1,687 an ounce.

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