The spot price of gold jumped as much as $21.90, or 1.4%, to $1,643.42 per ounce

The gold price climbed to a three and a half month high on Tuesday amid weakness in the U.S. dollar and a broad-based rally on Wall Street.  The spot price of gold jumped as much as $21.90, or 1.4%, to $1,643.42 per ounce, its highest level since May 6th.  Furthermore, the gold price broke out of the $1,560-$1,630 trading range it had occupied for most of the past three months. Commenting on the gold price’s advance, VTB Capital analyst Andrey Kryuchenkov asserted that “A break above $1,630 is very significant, as we breach the June-July and early August range.  Buy orders were triggered, with the dollar index also slipping below support at 82, or early July lows.”

U.S. markets followed their European counterparts higher, where several benchmark equity indices touched 13-month highs ahead of two key policymaker meetings this week.  Luxembourg Prime Minister Jean-Claude Juncker, head of the euro-area group of finance ministers, will meet with Greek Prime Minister Antonis Samaras in Athens tomorrow to discuss a possible two-year extension to the nation’s austerity program. On Thursday, German Chancellor Angela Merkel will meet with French President Francois Hollande in Berlin to discuss next steps as officials continue working to combat the sovereign debt crisis.

Back across the Atlantic, investors are awaiting tomorrow afternoon’s release of the latest Fed minutes – a recap of last month’s FOMC meeting.  The markets will be paying close attention to any hints that Chairman Ben Bernanke and his fellow central bankers may soon launch a third round of quantitative easing (QE3).

Despite how well the broader financial markets have performed in recent months, there remains considerable speculation that the Fed will implement QE3 before the year ends.  This expectation appears to be reflected in the gold price, given the fact that it was finally able to surpass the high end of the aforementioned trading range that it was stuck in for several months.

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 wai...
Read more

For the gold price, two outcomes are possible.

Image
For the gold price, two outcomes are possible. First is a return to or near the April low ($1,277.40). Second is a drop to a lower low, $1,240 - $1,260. Yet a third possible outcome is that the June and December lows were not a double bottom and one further drop may come. I account that the least likely, and look for a low here by the end of the week, but I'm no more'n a nacheral born durnd fool from Tennessee, so what do I know?   You'd think that an institution charged with promoting the gold industry would produce reports that at least cast the best light on gold's prospects. You'd think wrong, if you're thinking about the World Gold Council. They've been negative on gold for, oh, the last 14 years or so. Today they issued a report that contained a nugget about Chinese business using physical gold as collateral for bank credit ($40 bn worth) but they managed to tease a gloomy forecast even out of this inventive monetary use. That and bad ...
Read more

The price of gold advanced as high as $1,603.40 per ounc

Image
The gold price broke out to a new all-time high above $1,600 per ounce Monday morning, rising for the eleventh consecutive trading session. The price of gold advanced as high as $1,603.40 per ounce before backing off to trade just the $1,600 level. The yellow metal gained on the back of a surge in borrowing costs for Italy, the latest European nation to see its bond market come under heavy selling pressure. The lack of a deal to raise the $14.3 trillion debt ceiling also helped boost gold prices. The eleven-day rise in the gold price is the longest winning streak since January of 1980. The gold price delivered another noteworthy performance last week, climbing 3.2% on its way to a series of fresh record highs. With Monday’s advance, the gold price extended its monthly and year-to-date gains to 6.6% and 12.5%, respectively. Last week’s two-day Congressional testimony by Chairman Ben Bernanke on the economy and monetary policy revealed that the Fed remains open to the...
Read more