China's stimulus push, Japan election to aid gold: Expert

The key reason for recovery in global gold price is Federal Reserve chairman Ben Bernanke's statement that Fed will continue to remain accommodative with regards to quantitative easing program, says Edward Meir, Metals Analyst, INTL FCStone.

He further added that Japanese elections and China making some noise about a possible stimulus push has given gold a bit of a base and reason to rally.
He told CNBC-TV18 yesterday’s USD 40 move seen in gol price was in line with what has happened in the past. Also Read: Gold, silver may trade higher on upbeat global mkts: Angel Below is the verbatim transcript of Edward Meir’s interview on CNBC-TV18 Q: What explains the kind of recovery we have seen in gold over the last couple of days?
A: Basically what has happened is we dropped very sharply end of June once Ben Bernanke gave his speech on paring back the bond buying programme but since then we have had several Federal Reserve (Fed) governors including Bernanke himself walking back his initial statement saying we will still remain very accommodative. So don't worry about it, we are still going to remain easy and that kind of change in tone has reinvigorated the gold market.
Simultaneously you have seen the Japanese elections, that in a way is somewhat bullish for gold since it is reaffirmation of the expansionary policies and China is also making noise about possibly putting in some stimulus. So you combine all of those factors and you have given gold a bit of a base and a reason to rally. Q: But do you think all these factors support that USD 40 move that we saw yesterday? Yesterday’s up move was substantial and while some of it may have followed the outcome of the Japanese upper house elections on the weekend, we heard only today from the Chinese premier. So I am just trying to understand what explains that sudden jump up in prices in the last 24 hours?
A: Yes yesterday’s move was a bit exaggerated but if you look at the whole move it is about roughly USD 160 move from low to high. We had the same magnitude of move in late April going into May and we have had even bigger moves back in 2012. So if you look at it in aggregate it is not a huge move, it is in line with what we have been seeing in the past.