Spot Gold Continues to Climb after Fed comments
November 5th, 2009 Posted in Gold
Name: Russell Glaser
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The price of gold is fast approaching another milestone and potentially a new record price of $1100. The Fed’s recent comments did little to curb the appetite of spot gold traders after the FOMC signaled U.S. interest rates will remain low for some time.
Yesterday heavy volumes were seen as the price of gold rose to another record setting price. The commodity past previous resistance lines to a new high of 1097.05. Spot gold ended the day trading at $1087.25, up from 1084.55.
The fact that the FOMC actually emphasized its tone of a low Fed Funds rate for the near term was a positive for gold as the possibility still remains for a sharp rise in inflation in the future. A rising interest rate would potentially curb future inflation prospects. Gold is often seen as an asset to counter rising inflation.
The low interest rate in the American economy may be a negative for the dollar as other nations begin tightening their monetary policy. However, this may be a positive for gold as inflation may eventually creep up with such a low interest rate.
Gold trading has been booming as the dollar has declined and the price of spot gold continues to set new highs. Adding fuel to the market was yesterday’s mega purchase by the Reserve Bank of India, purchasing over 200 tons of gold from the IMF. If the dollar continues its pattern of decent, gold may cross the $1100 price level with ease.
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Tags: dollar, Forex Trading, Gold, spot gold trading
