What is the
gold price today? Gold prices gained 1.5% on Wednesday, its biggest one day rally in the last one month as expectations of further monetary stimulus from central banks bolstered the demand for the metal.
On Tuesday, the Wall Street Journal reported that the Federal Reserve was mulling over another round of quantitative easing and on Wednesday, the European Central Bank through its governing council said that the European Stability Mechanism Fund might be provided with a banking license. The proposed move will ensure that ESM will have a direct access to the ECB for additional funding.
Since, monetary easing tends to stoke up inflation, bullion’s appeal as a safe hedge gets burnished when central banks employ more economic stimulating measures.
Commenting over the latest development and its subsequent impact on bullion prices, Jeffery Sherman, commodities portfolio manager at DoubleLine Capital LP, having $38 billion in assets, said to Reuters, “The gold market has been looking for any hints of any quantitative easing program. You are seeing this big bounce today off the fact that there could be something going on in euroland.”
Some technical support also helped gold to extend gains as it looks fairly obvious that the metal is all set to break out of the trading range after Wednesday’s rally. Meanwhile, options-related buying above the popular $1,600 call strike price also boosted underlying futures ahead of Thursday's COMEX August option expiry, according to a data provided by the Reuters.
Spot gold climbed up 1.5 percent at $1,604.01 an ounce, having earlier touched a near three-week intraday high at $1,609.91 an ounce.
The lift in gold prices was attributed to Wednesday’s technical buying by traders. The bullion not only broke its chart resistance of 20- and 50-day moving averages but was also traded actively through options on COMEX and the SPDR Gold Trust (ETF) (
NYSE: GLD).
U.S. gold futures moved up $31.90 an ounce, settling at $1,608.10. A preliminary data by Reuters shows that trading volume was 60 percent above its 30-day average, a strongest in the preceding two months.
Lately gold has been strictly range-bound. In July, the yellow metal held in a $75 range, the narrowest range since April.
Many factors have contributed to gold’s lackluster performance in 2012. While the ongoing euro zone debt crisis weighed heavily on the euro denting the demand for gold, lack of any sort of hint from the fed regarding further quantitative easing limited metal’s gains. Furthermore, physical gold consumption from world’s two biggest consumers-China and India- also ebbed as both economies lost the momentum in first two quarters of the current year even as inflows in gold-backed exchanged funds fell significantly.
Renewed expectations of monetary easing also boosted the prices of other precious metals as well. Silver climbed 1.4 percent to close at $27.32 an ounce. However, both industrial metals, that is, platinum and palladium underperformed gold.
Spot platinum leaped 1.1 percent to settle at $1,393.45 an ounce, while spot palladium rose 0.8 percent to $560.65 an ounce. Gold’s rally on Wednesday also lifted its premium over platinum above $200 an ounce for the first time since January.
Meanwhile, the iShare Silver Trust (ETF) (
NYSE: SLV), the world’s largest silver backed exchange traded fund (ETF), saw a net outflow of 0.7% on Wednesday. According to Reuters, silver analysts believe that confidence in the metal remains wobbly and investors are wary of booking profits in rather traditionally volatile asset.
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