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Gold Climbs

August 20, 2012 – Gold prices gained a footing at the close of trading last week, following a rise in both the euro and European stocks after comments from German Chancellor Angela Merkel late on Thursday in response to the most recent iterations of the European debt crisis.

Gold remained range-bound, as it has been for over two months, and ended the trading week little changed, though inroads for a gain this week have been laid by the political commentary.

Gold contracts for December delivery gained $.20 after late gains in trading brought the price of gold to rest at $1,619.40 per troy ounce in the Comex division of the New York Mercantile Exchange. Prices were relatively unchanged, at 0.2 percent lower on the week.

Matthew Turner, an analyst with Mitsubishi, said he expected gold to hold in the current range during the short term.

Among the important contributing factors, Turner cited upcoming events including the German constitutional court ruling, Spanish bond auctions, and the IMF going to Greece. These events will be strong influences on the gold market.

Weakness in the dollar underpinned action in all the precious metals. The euro gained 0.2 percent against the dollar following German Chancellor Angela Merkel’s approving comments on European Central Bank president Mario Draghi’s pledge to do what is required to preserve the euro.

Analysts are eager for the ECB to unveil strong monetary measures, such as bond buying, which would give a boost of stimulus to European markets. The anticipation of European bond buying along with expectations for stimulus from the Federal Reserve have given gold more support this month.

European shares hit a five-month high on Friday as a key index extended its best weekly winning streak in seven years, partially on renewed hopes that European leaders will band together in order to solve the debt crisis that has been brewing for several years.

German Bunds dipped as European stocks took the momentum from the bond market.

INTL FCStone said in a note that a hurried round of meetings scheduled to take place in the next few weeks would provide more concrete direction for the precious metals markets.

The Jackson Hole meeting of central bankers scheduled for the end of the month is largely viewed as a point in which some clarity in the market can be achieved.

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