Gold and Silver Jump 2 and 3 Percent on Obama Win

Comex gold prices rallied to trade at a new two-week high in early trading Wednesday after prices pushed through technical resistance at the $1,700 per tory ounce level on Tuesday. President Obama’s re-election is perceived as a bullish factor for precious metals. U.S. gold futures for December delivery gained $6.20 to $1,721.20 per troy ounce as the spot price of gold gained $3.70 to $1,721.00. U.S. silver futures for December delivery drifted $0.0064 to $31.97 per troy ounce.

The main underlying technical feature of market action is the outcome of the U.S. Presidential election. Obama’s second term is typically perceived as confirmation that quantitative easing and ultra loose monetary policies will continue. The policies are often understood as causing currency debasement through the increase in the monetary supply and depression of interest rates. The monetary policies have been very bullish for gold and silver since their inception in 2008.

While the market is working through President Obama’s re-election, the focus of investors and analysts is quickly turning to other matters. Asian and European markets firmed overnight as U.S. stock indexes are weaker in early trading Wednesday as a part of a corrective pullback after gains made on Tuesday. Most analysts regard the Obama win as bullish for raw commodity markets as well as U.S. Treasuries.

The major focus developing is on the U.S. fiscal cliff tax and spending issues confronting both the current administration and the new Congress, now GOP controlled in the House of Representatives.

Amid the outcome of the U.S. election, European Union officials said Wednesday that the Greek economy will contract by 6 percent in 2012 and by 4.2 percent in 2013, which would account for six straight years of economic recession. The European Central bank is set to hold its monthly meeting on Thursday. There is a general leadership conference in China beginning Thursday, when new leaders will be selected.

The U.S. dollar index traded higher Wednesday morning to hit another fresh two-month high. U.S. dollar bears retain a slight overall near-term technical advantage, per analysis with Forbes. Crude oil bears have a near-term technical advantage with a seven-week-old downtrend on the daily bar chart, constituting the two outside markets with an influence on gold and silver prices.

U.S. economic data due to be released Wednesday includes weekly MBA mortgage applications survey, consumer credit, and the weekly DOE energy stocks report.

The London A.M. gold fixing is $1,730.50 against the previous A.M fixing at $1,691.00.

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