April 4The Bank of Japan, led by new Gov. Haruhiko Kuroda, announced it would implement $520 billion in government bond purchases per year. The dramatic move meant that the amount of quantitative easing would equate to about 10% of the nation's gross domestic product. Kuroda's decision showed the BOJ's commitment to hit a 2% inflation target in a couple of years and shift Japan from a more than two-decade period of deflation.
But the inflation-supporting measures out of Japan failed to boost gold, which many investors consider as an asset hedge against inflation pressures. Gold's headline -- the same day the BOJ implemented its historic monetary stimulus program -- was that it had posted a 10-month low. "Japan had really been the trigger," RJO Futures' Streible said. Streible said that when the BOJ announced its massive quantitative easing package, large institutions there had to rebalance and funds sold their gold positions and their yen positions to hold capital in order to hang on to exploding Japanese government bonds. April 10 A couple of events on April 10 hit the yellow metal. First, Goldman Sachs ( GS) lowered its gold price forecast and recommended investors to short COMEX gold positions. Second, the Fed released minutes of its March policy-making meeting earlier than expected after the central bank learned someone had inadvertently sent the information a day early to 154 individuals from various entities, including bank lobbying firms, Congressional staffers, and others. The minutes revealed a growing number of Federal Open Market Committee members who were embracing the idea to scale back the central bank's stimulus programs. Such a move likely would take a bite out of gold prices as the yellow metal's perceived status as a hedge against inflation would fade if the Fed slowed its expansion of the monetary base. The Fed news coupled with Goldman's short recommendation triggered a 1.8% selloff, normally considered a huge loss. Gold tacked on a slight gain for Thursday, April 11. April 12 Electronic trading of COMEX gold, by 5 a.m. ET on Friday, April 12, had already seen about a 2% selloff since the prior day's settlement. The movement sparked concern among traders that the market was destabilizing. A European Commission assessment had emerged that required Cyprus to sell about $523 million in excess gold reserves in order to supplement its bailout program. But the yellow metal was still hovering above the level of $1,525 an ounce -- a technical number that traders widely perceived as a critical level of support -- which suggested that the worst of Friday's session had finished before most people were arriving at their offices. "The average broker gets on the phone and starts calling customers: 'Hey, market's down, are you sending in more money, do you want to buy more, or what are your instructions?'" said George Gero, precious metals strategist at RBC Capital Markets. "Most customers make price decisions; they don't like uncertainty, so with the price decisions