Talk of European and U.S. Stimulus Sparks Gold - Goldco Staff Writer

Tuesday, 24 July 2012
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Published in Gold Investing

Gold was sparked again today after renewed talks of both a European and a U.S. stimulus were renewed. The yellow metal jumped nearly 2 percent as investors found the news of stimulus talks very exciting. While the Feds will continue to wait in hopes that the slow to recover economy will improve without the stimulus, the fact of the matter is that they may have no choice but to inject another cash stimulus into the economy.

First-Strike

Gold was poised to have its biggest day in over a month, especially after the Euro zone news of a likely stimulus. The yellow metal has taken a beating lately, but has started to recover over the last few days, even holding its own against a strengthening dollar.

"The gold market has been looking for any hints of any quantitative easing program. You are seeing this big bounce today off the fact that there could be something going on in euroland," said Jeffrey Sherman, commodities portfolio manager at DoubleLine Capital LP, which has $38 billion in assets

Spot gold was up 1.9 percent to come in at $1,609.26 an ounce earlier today, having hit a near three-week high at $1,609.91 earlier in the session. U.S. gold futures for August delivery were up $32.20 an ounce to come in at at $1,608.40, with trading volume on track to be the strongest in over a month, this according to most data.

This is actually very welcomed and exciting news, as the yellow metal has not yet been able to find a true footing in 2012. As many had predicted, the $2,000 per ounce price mark for gold was expected to happen this year. While we may be surprised by something and that could still happen, most analysts agree that number won’t be reached until sometime in 2013.

Gold has held in a $75 range in July, its narrowest monthly spread since April. Weak seasonal buying in top bullion consumers such as India and China, waning inflows into gold-backed exchange-traded funds and euro zone debt jitters have limited price gains. The good to take from all of this is that while gold has not been able to gain much lately, it also hasn’t lost much, as these numbers show that the yellow metal is continuing to stay strong and hold its own against bad news and a stronger dollar.

We will continue to monitor it for the rest of the week. The yellow metal may make gains on both Thursday and Friday and head into the weekend strong.
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Jeremy Holcombe

Jeremy is a seasoned finance writer who has been studying the gold and silver industry for many years. His vast knowledge in the precious metals sector led him to Goldco Direct, where he is now one of their most recognized writers both on the site and around the web. Along with being a senior Precious Metals writer for Goldco Direct, he is frequently featured on many financial sites on the internet where they tap into his knowledge about gold. Jeremy is passionate about educating investors about the yellow metal as its price continues to rise to record breaking levels.