Gold Prices And EFTs Rally on Expectations of QE3

 |  by Michael Locklear

September 10, 2012 – Last week’s non-farm jobs report pushed Gold prices up to a six-month high. August job growth in the U. S. was significantly lower than projected expectations. The job numbers show that only 96,000 jobs were created against an expectation of job growth near 125,000. This 0.2% decline in employment numbers had gold bulls rallying as they pushed up the spot price of gold near the $1730 mark. This represented the largest advance in six months.

Today the spot price of gold is at $1735.50 as gold continues to move towards yet another new high. As the precious metal continues to rise one of the beneficiaries is the gold ETF’s which continue to expand along with the spot price. Remaining more or less firm after the European Central Bank announcement concerning new monetary easing measures for the euro zone, more weakness than expected in the US labor report pushed Gold higher on Friday.

Market speculators are now anxiously awaiting the next round of Federal Reserve meetings as the FOMC meets this week to decide what the next step should be in their efforts to shore up the U. S. Economy. A broad consensus among the bowls in the investment market is that the Federal Reserve Chairman Ben Bernanke will announce this week that a new round of monetary easing is in play.

In the last Federal Reserve meeting in Jackson Hole, Wyoming remarks made by Chairman Bernanke that there were grave concerns over the US labor market and the devastating effects of continued stagnation in employment numbers continues to fuel speculation that a new round of quantitative easing is almost guaranteed . Even though the chairman’s commitment to lowering US unemployment numbers is widely known there is another threat on the rise – the so-called ”fiscal cliff”. Because this is even a more dangerous scenario than our current unemployment numbers it’s entirely possible that in their meeting this week the Federal Reserve would choose to wait yet again to determine what the forecast in the near future will be concerning the resolution of the issues around the “fiscal cliff”.

Nonetheless, it does appear fairly obvious, that regardless of the impetus the Federal Reserve will institute new quantitative easing measures in the very near future. The realization of these facts is pushing the price of gold higher and higher and the desirability of Gold EFTs is significantly on the rise as investors flock to this investment option.

In a related note, UBS appears to be lining up with the gold bulls with a prediction that gold will reach $1850 per ounce this month. They also cite the increasing anticipation that the US Federal Reserve will commence its third round of quantitative easing by weeks end. In response UBS gold forecasts for the coming few months is that gold will make a significant leap of more than $100. All in all the bulls are running strong today. Expectations are very high for all new breakout rally of gold.

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