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Stimulus Announcements Pushes Gold To 6 1/2 Month High

by Michael Locklear

Anticipation that recent central bank monetary easing actions will increase liquidity and inflation while keeping interest rates low pushed gold prices to new six and a half month high today. This is Gold’s fifth straight week of price advances. The spot price for gold hit a peak today at $1787.20 an ounce but retreated slightly to stabilize at $1775. Investors are still empowered by predictions coming from major financial analysts at Bank of America, Morgan Stanley, Deutsche Bank, and Standard Chartered all of them have predicted that the price of gold will continue to rise substantially in the near future.

Bank of America has said that gold prices will exceed $2000 during the first two quarters of 2014 and end up by the year end at $2400. Deutsche Bank’s prediction for gold is $2000 in the first half of 2014 while Morgan Stanley predicts that the price will average out at $1816 during the coming year. In addition Standard Chartered, comes in the prediction of $1900 per ounce as an average for the second quarter of 2014. UBS has also made its own predictions for gold reaching $1800. All of this is great news for the gold bulls.

The expectation that the Fed will maintain near zero interest rates into the middle of 2015 and recent information on inflation has gold investors seeking a hedge and continuing to push the price higher. The commodity most likely to benefit from quantitative easing is Gold. Sharps Pixley CEO predicts that he thinks the goal will reach $1800 per ounce in the next couple of weeks.

The number of investors eyeing gold exchange traded funds has increased in response to the recent announcement by the Federal Reserve of its new round of quantitative easing. Though still below record highs holdings by ETF’s are up this week. Investors have pushed GTP’s to a new high since July the largest increase since the spring of 2010 to a level of 115.9 metric tons. Holdings are currently at a record as of yesterday of 2523.7 tons. As we approach the upcoming annual religious festivals in India which are coupled with the height of the wedding season, the market is anticipating a substantial increase in personal gold purchases that all further boost the market prices. However gold imports for India have fallen so far this year by about 56%.

Gold coins are not quite caught up to the increases in gold ETF’s and still remain low against last year’s figures. Some are predicting that there may actually be a decline in bullion after its recent two-month rise. Gold has risen 70% since the Fed’s initial announcement of quantitative easing in 2008. At this time the future still looks bright for gold investors as everyone waits to see which of the price increase predictions come true.

Stimulus Speculation Pushes Gold Toward Five-Month HighSeptember 4, 2012 – Federal Reserve Chairman Ben Bernanke’s speech last week at the Fed’s annual symposium in Jackson Hole, Wyoming that hinted at an inclination toward further monetary easing fueled gold prices on Monday. Strong investor demand coupled with the expectation that the Fed will move in the near…
Gold Rises To Five Month HighSeptember 3, 2012 – Gold rose to a five-month high today as gold bulls and market investors continued to increase their wagers that additional monetary easing is still on the way after Friday’s speech by Federal Reserve Chairman Ben Bernanke during which he indicated an inclination toward a third round…
Gold Moves Toward Six Month High,Then RetreatsGold started out the day pushing towards a six-month high as the spot price rose to $1779.10 before retreating to the current spot price of $1769.70. The price rose after the announcement of the Bank of Japan that it would join the other central banks in its own round of…
European Central Bank Bond Plan Pushes Gold To Six Month HighSeptember 6, 2012 – The spot price of gold reached a six-month high today of $1712.90 as markets are excited over the announcement today of European Central Bank Pres. Mario Draghi that the ECB would initiate a virtually unlimited program for buying bonds in order to reduce borrowing costs for…
Gold Prices Continue to Rise On Fed ExpectationsSeptember 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…