GOLD HOLDS ONTO GAINS AHEAD OF WEEKEND
Gold closed above $1,770 today, finishing strong after a tumultuous week of news affected the yellow metal. Economically, Gold is a commodity that is traded around the world.; its value is driven by global events. But this week all eyes were on the Fed and the announcement of QE3. Precious metals aren’t the only winners. All the major indexes were up; the
S&P saw levels it hasn’t seen since 2007.
Oil prices are reacting to the Fed’s announcement as well as the recent unrest in Middle Eastern countries. Phil Flynn, senior market analyst at the Price Futures Group in Chicago summed up a commodity reacting to the announcement this way. “You cannot fight the Fed. If you’re going to put more money into the system, you change the value of the commodity. If it’s priced in dollars, it’s going to take more of them to buy it. And if it’s going to stimulate the economy, it’s going to increase demand going forward.”
Commodities like oil, and especially Gold, react when you put more money into the monetary system via a QE or other mechanism. What you do is change the value of the Gold relative to the currency. Holders of Gold believe that eventually their purchases will increase in value due to such actions by the Fed. This is the safe-haven appeal of Precious Metals, we could see increased demand as the QE program continues.
At 5:00 p.m. (EDT), the APMEX Precious Metals spot prices were:
- Gold, $1,771.90, Up $0.80.
- Silver, $34.70, Down $0.09.
- Platinum, $1,710.30, Up $29.80.
- Palladium, $696.70, Up $7.70.
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