Gold began the day fairly well contained, just off the three-week highs that were established on Tuesday at 1204.70. Later in the morning, a bout of volatility ensued as a result of new polling on the Swiss gold initiative.
Gold dropped sharply intraday amid reports that the latest polling in the Swiss measure had basically flip-flopped; from an edge toward passage to an edge toward rejection. A poll conducted by Swiss TV SFG showed those against the measure were at 47%, while those in favor had dropped to 38%. That’s a pretty dramatic shift from a recent poll that was 44% in favor, and 39% against.
One of the contributing factors to gold’s recent rebound was certainly the chance that Switzerland would not only be repatriating their existing gold reserves, but doubling those reserves over the next five years. The shift in expectations based on the most recent poll, spooked some longs, driving the market down more than $20 in a very short period of time. However, either the polling was discounted, or maybe some remaining shorts in the market saw it as an opportunity to square up, because the yellow metal came roaring right back.
U.S. investors are probably aware as any right now — coming off the recent mid-term elections — just how off the mark polling can be at times. The measure may still pass and as we learned earlier in the week, the Swiss may be competing with the ECB in building their gold reserves.
The minutes from the last FOMC meeting show that the Fed is perhaps getting modestly more comfortable with growth and labor market prospects. However, they have perhaps a slightly greater concern about inflation expectations. They kept the “considerable time” language because of a fear that the market would interpret its removal as a “significant” shift in policy.
Shinzo Abe’s LDP party is expected to lose seats in the December election that he called this week, but is still expected to retain enough power to proceed with his destruction of the yen. A U.S. thin-tank believes 20-30 seats will be lost, but a WSJ article suggests his coalition could cling to a majority even if more than 80 seats were lost.