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Gold Prices Continue to Rise On Fed Expectations
by Michael Locklear
September 11, 2012 – As investors are waiting and anxiously anticipating the outcome of this week’s meeting of the Federal Open Market Committee (FOMC), which is responsible for policy-setting and the Federal Reserve, to see if the Fed will institute a new round of monetary policy; the market is still fired up about QE 3. The spot price for gold rose again today to $1734.70 per ounce.
Still encouraged by the remarks made last month at the Federal Reserve Symposium in Jackson Hole, Wyoming by Federal Reserve Chairman Ben Bernanke, gold bulls continue to push the price of gold further up. In his remarks Bernanke expressed grave concern over the state of the U. S. Labor market and its overall impact on the U. S. Economy. He made it very clear that there is an urgent need to lower the unemployment numbers which clearly represent a major threat to the health and stability to the nation’s economic future.
Investors are also anticipating a decision tomorrow by Germany’s Federal Constitutional Court on the €500 billion European Stability Mechanism. Germany is seeking to participate in a permanent bailout fund for troubled economies in the euro zone. Both of these major decisions, which are expected over the next two days, have an increasing number of people moving toward the precious metal.
Investors in the market have already factored in another round of quantitative easing as most are certain that these actions by the Fed are inevitable and imminent. Recent predictions by two major banks, one being UBS which has said the gold will reach $1850 per ounce by year’s end and a representative of the Bank of America has said his projection for gold’s price growth to reach $2000 per ounce by the end of 2012. This is a very exciting time for gold bulls and the future looks very bright for gold profits although not particularly well for the rest of the global economy.
Some experts are saying that even in light of the dismal job numbers from last week’s US labor market report another round of quantitative easing may not be imminent; although it may be an eventual outcome. It is still possible that the Federal Reserve will not come to a conclusive decision at this week’s meeting of the FOMC. It is entirely possible that instead of a QE3 announcement the Fed will instead continue its policy of near zero interest rates for additional couple of years, until 2015.
Nonetheless gold prices will most likely continue to rise because anticipation generally fuels fear and the fear right now is a global currencies are in serious jeopardy. The price of gold will most likely continue to rise because these fears are widespread and gold is the ultimate shelter for those seeking protection from a dismal financial future.
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