Gold Posts Weekly Gain, Erases Previous Week’s Loss
Gold price rose a little today. The most likely reason for the rally was speculation that poor US macroeconomic data would prompt the Federal Reserve to stimulate the economy. The manufacturing index of the Federal Reserve Bank of New York slumped from 17.1 in May to 2.3 in June, much more than was anticipated. Industrial production demonstrated a decline by 0.1 percent instead of the expected increase by the same rate. The University of Michigan reported in its preliminary estimate that confidence of US consumers unexpectedly worsened.
The Fed board will meet on June 19 to discuss the monetary policy. The central bank has refrained from a next round of quantitative easing during its previous meeting, weakening gold price. This week, however, we have seen a string of rather bad fundamental reports, while earlier very poor employment data signaled that the US recovery is stagnating. Considering all the information, QE3 does not look impossible. If the Fed will indeed implement additional stimulating measures, that would be very positive for the precious metal.
This week was positive for gold. The metal fell on Monday, but was rising for all of the following days. The gains were not big, but the rally managed to repair the damage done by a sharp drop last week.
Gold closed at $1,627.30 per ounce on COMEX today, rising from the opening level of $1,624.30.
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