Gold Prices Breaking New Highs After FED Announcement

Market Leader informed

On Thursday, after the US Federal Reserve announced buyback of treasury bills worth 800 bn. dollars as an incentive for the country's slow economic growth, market prices of gold futures started growing. A weaker dollar inevitably triggers an appreciation of gold, traditionally viewed as an alternative and more reliable asset, and, at the same time, reduces dollar-denominated commodity prices as compared to other currencies.
For example, in response to the weakened dollar December gold futures on New York Mercantile Exchange sky-rocketed by 3.4% (to $1,383.10 per Troy ounce).

According to analysts, the gold market currently demonstrates an uptrend, and some forecast the level of the price record at $1,461 per Troy ounce that can be reached with the help of assets concealed for some time. From this year's start this precious metal went up 24%, and if the rising tendency remains for another year this will be a record trend over the past 90 years. The economic crisis of the past couple of years, instability of the global financial system, the crisis of sovereign debt of a number of European nations are all reasons for a stable appreciation of gold.

Growing gold prices are also connected with a higher demand from India, the world's largest buyer of gold, where the Hinduist tradition requires that during New-Year celebrations (Dhanteras, Diwali) held in November people make presents and adorn themselves and their homes with gold items. According to the statistics of Bombay Bullion Association, 44 tons of gold was delviered to India this October, or 7.8 tons more that last year.

Prices of another bullion metal, silver, also started growing: during the Thursday session on New York Exchange, December futures for delivery of silver traded at $25.13 per Troy ounce after breaking a thirty-year high.

"Analysis of global trends demonstrates that currently investors prefer to stay outside stock markets and shift their focus on other ways of keeping cash, for example, in gold", - as was pointed out by Howard Friend, Chief Economist of the leading Forex broker - MigBank.

The analyst points out that after breaking the high at $1,325.82 earlier this week the gold price tested the level at $1,387.35 which remains the historical high so far. Though the support around $1,359.70 triggers short-term risks it is clear that the drive for $1,400.00/1459.25 (a pshychological level) has not exhausted itself yet. At the same time, a break of the level at $1,359.70 will mean a bearish direction of the trend in the medium term, i.e. gold will become a little cheaper.

 

 

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