RSS FeedRSS

Gold Up 1 Percent to 3-1/2 Month High on ECB Stimulus Talks

August 22, 2012 – Gold gained to its highest levels since May on Tuesday, a full 1 percent, as speculation increased that the European Central Bank will take action to assist Spain and Italy. Platinum is also hitting 3-1/2 month highs as violence at a South African mine has raised concern about supplies from the region.

Gold extended the rally into its fifth straight trading session, on track to posting its biggest one-day rise in almost a month, on reports that the ECB was preparing moves to ease Spanish and Italian borrowing costs.

Technical support also kicked in as gold broke through its 100-day moving average, though analysts see the 200-day moving average as the next line of resistance for the precious metal. Bullion buying also bolstered by a four-month high on Wall Street and surges in other commodities, led by crude oil and grains.

Jeffrey Sica, chief investment officer at SICA Wealth Management, pointed out that a persistent fear that equities markets have appreciated beyond a point of sustainability have also contributed to the move toward diversification into gold.

He added that economic numbers from around the world do not justify a recovery without liquidity created by central banks. Sica’s firm manages $1 billion in assets.

The spot price of gold hit a high at $1,641.20 per troy ounce, the highest level in the market since May 7. By midday trading, the price of gold hit $1,637.71 per troy ounce, a gain of 1.1 percent.

US gold futures for December delivery gained $17 to $1,630 per troy ounce, with trading volume in line to finishing the trading session close to its 30-day average, according to preliminary data from Reuters.

Silver also gained 1.7 percent to $29.26 per troy ounce. Earlier in the trading session, silver reached its highest level since early June at $29.42 per troy ounce.

The anticipation of stimulus was widespread ahead of a meeting between Greece’s prime minister, German Chancellor Angela Merkel, French President Francois Hollande, and Eurogroup chief Jean-Claude Juncker this week, at which time they are expected to attempt to secure more funding from the European Union, the International Monetary Fund, and the European Central Bank.

GS social media share img

Get Your Complementary Award Winning Guides Below

 Publish Real Money Magazine

 Publish Gold Investment Magazine

 Publish IRA 401K Kit Magazine

 Real Money Magazine