Gold price just broken USD 1,400 level.

The gold market rallied $60.10/oz on Thursday and Friday in a reaction to the Fed’s QE2 package unveiled on Wednesday afternoon. The initial reaction on Wednesday was quite small and made the event seem inconsequential to prices. However, an op-ed article in the Washington Post the next day provided the impression that the Fed would continue to ease monetary policy until the value of asset markets begin to rise and boost consumers’ confidence.

That gave a green light to most assets to make strong gains, and for gold prices to break out to record highs. Gold advanced $45.50. Gains in energy prices provided inflation suggestions to gold, suggesting that it would be needed as a hedge. Later on Thursday, Pres Obama said that he is open to extending the tax cuts to all income groups, and the Fed said it would consider allowing stronger banks to raise their dividend payouts.

The events created the impression that the economy was recovering. Up to date, gold price just broken USD 1,400 level.

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