Gold climbed as much as $20.96, or 1.2%, to $1,794.32 per ounce

The gold price began the fourth quarter of the year on a positive note amid a broad-based rally in financial markets and weakness in the U.S. dollar.  The spot price of gold climbed as much as $20.96, or 1.2%, to $1,794.32 per ounce this morning – its highest level since November 14, 2011.  Gold prices received a boost from dovish remarks by Charles Evans, President of the Federal Reserve Bank of Chicago.  Evans stressed the need for the Fed’s open-ended third round of quantitative easing (QE3) until the U.S. unemployment rate drops below 7%, which is currently at 8.2%.

The gold price began the final quarter of 2012 with a great deal of momentum, thanks in large part to the expansion of ultra-easy monetary policies by the world’s largest central banks.  During the prior three months, the price of gold climbed 10.9% – marking its best period since the second quarter of 2010 – after the Fed, the European Central Bank (ECB), and the Bank of Japan each announced additional money printing measures to stimulate their respective economies.

Evans – considered to be one of the Fed’s foremost doves, along with Chairman Ben Bernanke – stated in a CNBC interview this morning that “There’s scope for doing more” with regard to QE3.  Under the current structure, the Fed will be now purchasing $40 billion of mortgage-backed securities per month for an unspecified amount of time that is dependent on the U.S. unemployment rate and several other economic factors.

“I would have been doing more for a longer period of time,” Evans contended.  “The committee made the determination that we’re a lot closer to something like unacceptable growth — stall speed — and it’s time to do more.”
Looking ahead, Mr. Evans and his fellow central bankers will receive more economic data this week as they continue to monitor the condition of the U.S. economy.  In addition to this morning’s ISM Manufacturing Index – which came in above expectations of 49.7 at 51.5 – the ISM Services report will be released on Wednesday.  The ADP Employment data will also be announced that day, followed by weekly jobless claims on Thursday and the non-farm payrolls report for September on Friday.

As for the gold price, MKS Finance’s head of trading, Afshin Nabavi, commented on Monday that “Overall, I still think one has to buy on dips. Everything else, whether it is political or economic, seems to be a shambles … Investors that missed the boat (at lower prices) perhaps want to see if we get to $1,800 before they get back in.”  Nabavi also noted that he expects the price of gold to rally to $1,900 – just below its all-time high of $1,923 – by the end of this year.

Comments

Post a Comment

Popular posts from this blog

Gold edges up on weaker dollar, dovish U.S. Fed policy bets

Image
 Gold edged higher on Monday, helped by a weaker dollar and expectations that the U.S. Federal Reserve will reiterate its dovish monetary policy stance this week. Spot gold was up by 0.1% at $1,943.58 per ounce. U.S. gold futures rose 0.1% to $1,950.10 per ounce. “Gold is firm on the basis that the Fed could adopt a further dovish message with respect to average inflation targeting,” said Michael Hewson, chief market analyst at CMC Markets UK. “If you want to have a policy of average inflation targeting, you’re going to have to go into detail as to how you are going to arrive at that particular outcome.” The dollar retreated on Mond ay, bolstering gold’s appeal for investors holding other currencies, ahead of the Fed’s policy decision due on Wednesday. “If inflation forecasts remain at 2% or below, this could offer gold a tailwind as the zero-yielding metal thrives in a low-interest rate environment,” said FXTM analyst Lukman Otunuga. Market participants are also waiting
Read more

Gold Price Futures (GC) Technical Analysis – Trader Reaction to Minor 50% Level at $1954.80 Sets the Tone

Image
  Gold futures closed lower on Thursday but up from its low of the session as investors battled a number of factors including U.S. economic data and outside market influences. Earlier in the session, gold fell over 1%, as positive economic data elevated hopes for a quick recovery while dampening the investment appeal of the precious metal. On Thursday, December Comex gold futures settled at $1937.40, down $11.60 or -0.60%. On the data front, a drop in U.S. jobless claims reported Thursday and positive manufacturing data reported earlier in the week are taking some shine off gold. A weaker Euro is also weighing on dollar-denominated gold by driving up thU.S. Dollar Index. U.S. weekly jobless claims fell below 1 million last week for the second time since the pandemic started, but did not signal a strong recovery in the labor market because the drop largely reflected a change in the methodology used to address seasonal fluctuations in data. Earlier in the week, a report s
Read more

India, not Trump, is the real reason behind the crash in gold prices

Image
If you have been puzzled about the crash in gold prices after Donald Trump's election, you are in the company of almost every analyst and media outlet in the western world. Gold and silver are a major part of the research at The Arora Report. A combination of our proven precious metal algorithms, extensive resources and knowledge of the emerging markets led us to alert subscribers to The Arora Report early that gold was about to crash and the reason behind it. Immediately after the election, the net position of The Arora Report in gold, silver and miners has been short as part of a sophisticated strategy.
Read more