The price of gold rebounded

The gold price rose higher by $10.90, or 0.6%, at $1,722.20 per ounce.  The price of gold rebounded alongside the broader stock and commodity markets despite stability in the U.S. dollar.  The SPDR Gold Trust (GLD), a proxy for the gold price and the world’s largest gold ETF, climbed $1.91, or 1.2%, to $166.20 per share.

Yesterday marked the most noteworthy day for the gold price in several months, as the Gold prices plummeted over $100 per ounce on an intra-day basis.  In early morning trading the spot price of gold held steady near $1,785, but turned lower upon the release of Fed Chairman Ben Bernanke’s testimony to Congress on the state of the economy. The testimony indicated that given the improvement in the U.S. labor and housing markets, the Fed does not intend to launch a third round of quantitative easing (QE3) in the near future.  Jan Hatzius, chief U.S. economist at Goldman Sachs characterized Bernanke’s prepared statement as offering “no clear signal about further easing.”

Looking ahead for the gold price, Jeff Wright – a senior research analyst with Global Hunter Securities – commented that “Gold market participants are taking profit taking opportunity in conjunction with the Fed Chairman’s comments regarding monetary policy.  With the recent run up in gold and silver; no fund manager wants to be the ‘Bag-Holder’ if a true correction back to the $1600 range occurs…. Our thesis of gradual appreciation is still intact but with periods of volatility in both gold and silver markets. I believe longer term investors will step in to support gold and silver if the sell off continues in the coming days.”

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