Monday, 19 Oct 2009

Gold Prices Continue to Climb

Gold finished the previous week trying to hold its record price, but during today's trading the price rose along with those of riskier assets. The price appears to have hit a significant technical level as equities and crude oil both pushed to new highs. A flurry of corporate earnings releases fueled the rally in risky assets and could continue to push prices higher tomorrow with new positive economic data.

The dollar traded lower today as comments by the Federal Reserve Chairman Ben Bernanke hinted at the possibility of keeping a loose U.S. monetary policy in the future. Currently U.S. interest rates stand at an all time low and the Fed is continuing with other unorthodox methods for creating liquidity in the financial system. Bernanke also spoke of the rising influence of Asian economies and the possible trade imbalances they bring to the global economy.

The price of gold steadied at the $1060 mark, a key technical level. This is up from an opening day price of $1052.40. Oil is now trading above $80 for the first time this year and the EUR/USD is trading near the 1.4950 mark. Traders may have their sights set for the 1.5000 mark, a key psychological price level.

There could be a continuation of the bullish streak in gold, despite the surprising rise in the price and some analyst's calls that the commodity is overbought both fundamentally and technically. Much of the volume is driven by an increased risk appetite as signs the global economy is improving. Tomorrow, look for a better than expected U.S. Building Permits release as traders may once again bid up gold prices on positive economic news.