Federal Reserve chairmen’s tone of voice researched

THE tones of voice used by United States Federal Reserve chairmen when they deliver their speeches is enough to cause waves in the gold and silver markets, according to research from Edinburgh University.

Arman Eshraghi, a finance fellow at the university’s business school, examined about 400 speeches given by Fed chairmen between 1999 and 2012.

He found that the tones used by Alan Greenspan, who held the post from 1987 to 2006, were more likely to move gold and silver prices significantly.

Those used by the current chairman, Ben Bernanke, appear to have little effect.

Eshraghi’s research looked not just at what the chairmen said in their speeches but also the tones of their voices in their delivery. He said: “Gold and silver markets reacted not only to what Alan Greenspan said, but also to how he said it.

“Greenspan had more realism in his speeches, talking about tangible matters that affected people’s lives, and more activity too, speaking about movement and change. Bernanke has a more professorial tone.”

News of the research came ahead of tomorrow’s Fed meeting at which Bernanke is expected to clarify the outlook for the bond buying programme, which has been supporting the growth of the US economy and the buoyancy of global markets.

Stephen Briggs, metals strategist at BNP Paribas, pointed out: “The wider markets are really keen for some clarity and the Federal open market committee will be aware their recent communication has led to some turbulence in markets, so maybe they will try to calm that.”