Talks About QE Beneficent for Gold
Today, gold traded near the $1,700 level, which was last reached in March. The rally was caused by hopes for stimulating measures from various central banks. Such measures should spur inflation that would be beneficent for the precious metal.
Last week, Federal Reserve Chairman Ben Bernanke hinted that the US central bank may implement the third round of quantitative easing. Indeed, today’s negative macroeconomic data from the United States confirmed that the economy requires support. There will be employment reports later this week, which should affect markets tremendously. The Fed watches employment with utmost care and negative data would increase chances for QE3 in the near future.
The data from the eurozone was not good either. Most analysts believe that the European Central Bank will cut its main interest rate from 0.75 percent to 0.5 percent during its policy meeting on Thursday. Moreover, ECB President Mario Draghi spoke about his plan to initiate purchases of 3-year bonds. That would be a European version of QE, which should add to strength of gold.
Gold traded at $1,695.54 per ounce, near its opening level, as of 20:09 GMT on COMEX today. Earlier the metal touched $1,695.95 — the highest price since March 13.
If you have any questions and comments on the commodities today, use the form below to reply.