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Gold Gains 10.6 Percent in Third Quarter, Hits 2012 High

Release Date: 
Monday, October 1, 2012

Gold prices rose 10.6 percent in the third quarter, seeing a 5 percent gain in September alone as the world’s central banks increased liquidity to aid struggling economies. Gold was $6.30 higher at 7:47 a.m. Pacific Time on the New York Spot Market, trading at $1,778.40 per ounce. Spot silver was $.29 higher, trading at $34.88 per ounce. (Click here for the most current spot prices.)

Gold hit its highest price of 2012 after Charles Evans, the president of the Federal Reserve Bank of Chicago, said the Fed’s current bond-buying program would likely continue through 2013. The Fed had previously left the time period open-ended in its policy statement and comments.

On Sept. 13, the Fed announced its plan to purchase an additional $40 billion in mortgage-backed securities each month until the labor market improves, bringing total monthly purchases to $85 billion. Mr. Evans said Monday that “substantial” improvement would be about a 200,000 increase in payrolls a month for about six months and supporting "above-trend" growth.

A key Labor Department report on September unemployment is due on Friday. Economists expect 115,000 workers to have been added to non-farm payrolls in September, following August's 96,000, according to a Reuters poll.

Afshin Nabavi, head of trading at MKS Finance commented on gold saying, "overall, I still think one has to buy on dips. Everything else, whether it is political or economic, seems to be a shambles... “ Nabavi expects gold to reach $1,900 per ounce before the end of this year.

Dave Govett, head of precious metals at Marex-Spectron, said “I still favor buying dips in the market and think that before long we will see a renewed assault on $1,800. But in the meantime, trade the ranges and watch the dollar, stocks and oil for short term direction."

"In the short term, the weaker euro/dollar does have an impact on gold prices," said Dominic Schnider, an analyst at UBS Wealth Management in Singapore. "While structural change in Europe will take years, the short-term solution to the debt crisis is money-printing, which will support gold."

(Sources: “Gold at 2012 High,” Wall Street Journal, October 1, 2012; “Gold gains after manufacturing data,” MarketWatch, October 1, 2012; “PRECIOUS-Gold drifts lower as Spain worries weigh on euro,” Reuters, October 1, 2012; “PRECIOUS-Gold dips, caution sets in over Friday jobs data,” October 1, 2012)

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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