Gold Prices Steady after Bernanke’s Hint at QE3, Silver Prices Gain
Gold prices held steady at just above 1,670 an ounce on Monday following Federal Reserve Chairman Ben Bernanke’s hint at possible additional quantitative easing on Friday, rekindling gold’s inflation hedge appeal. Silver prices, meanwhile, edged higher in early trading on Monday.
Earlier during the last week, spot gold climbed 3.4%, the biggest one day jump since early January and highest level since early May as investors’ sentiment on gold picked up following the release of minutes from Fed’s latest FOMC, which hinted at further easing. Hopes of monetary easing have also been raised by Bernanke’s comments in a letter dated August 22 to U.S. Rep. Darrel Issa, which was obtained by the Wall Street Journal.
Investors will now keep a close eye on the Fed’s annual symposium at Jackson Hole, Wyoming on Aug 31, hoping to gain some more insight on the central bank’s plan to stimulate the economy.
Meanwhile in Europe, the European Central Bank (ECB) is considering setting up a specific bonds yields target range for the highly indebted countries. Accordingly, should the yields jump over certain band, the ECB will swiftly move in to purchase bonds in order to keep soaring interest rates under control and discourage speculation.
Nevertheless, the proposal was unwelcomed by Bundesbank, which stated it as “dangerous drug” even as one of the conservative allies of ruling government said that Greece should leave the monetary union by next year.
Holdings In ETF’s Soaring
A data provided by Reuters showed that holdings in gold-backed-exchange-traded-funds rose above 71.4 million ounces during the last week which is a record high.
According to U.S. Commodity Futures Trading Commission, speculators also increased their positions in U.S. gold futures and options to 140,126 lots in the week ended Aug. 21, the highest level since early May.
At last check spot gold traded at $1,674.40 an ounce, having earlier touched $1,676.45 an ounce, a 4-1/2-month high.
U.S. gold futures were flat at $1,671.30 an ounce.
Wang Tao, Reuters technical analyst suggests that gold can hit as high as $1,693 an ounce on Monday.
Silver gained 0.62%, to $30.81 an ounce.
In pre-market trading, the iShares Silver Trust (ETF) (NYSE: SLV) was trading 0.87% higher, the ProShares Ultra Silver (ETF) (NYSE: AGQ) was trading 1.71% higher at $47.63, and the ProShares UltraShort Silver (ETF) (NYSE: ZSL) was inactive.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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