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Gold Price Targets $1,340 Level

Release Date: 
Wednesday, February 2, 2011

GOLD PRICE NEWS – The gold price held firm Wednesday morning, trading near unchanged at $1,337 per ounce. The price of gold has stabilized above the $1,330 per ounce level. Following a 6.3% sell-off in the gold price in January, the yellow metal began the month of February with a modest gain yesterday amid continued weakness in the U.S. dollar. The gold price inched higher as the euro currency traded to 1.38 against the U.S. dollar, its highest level since November 11.

The commodities complex posted gains alongside the gold price with the Reuters/Jefferies CRB index hitting a new 28-month high of 343.05. Copper rallied $0.09, or 2.0%, to $4.547 per pound, a new all-time high. Silver rose $0.33, or 1.2%, to $28.51 per ounce, while platinum climbed $34.00, or 1.9%, to $1,830 per ounce. Oil, which is rebounding today, was the one dark spot yesterday, however, falling $1.78, or 1.9%, to $90.41 per barrel.

SandP stock futures pointed to a slightly lower open on Wall Street Wednesday morning following yesterday’s surge higher in equity prices. The Dow Jones Industrial Average (DJIA) and SandP 500 Index closed above 12,000 and 1,300, respectively, for the first time since June 2008. The CBOE Volatility Index (VIX), tumbled 9.7% to 17.63 as risk appetites on Wall Street remained healthy.

In recent sessions, the gold price has amid both bullish and bearish catalysts. The U.S. dollar’s weakness initially propelled the gold price above $1,340 Tuesday, but the better than expected ISM Manufacturing Index fueled a slide in the yellow metal to as low as $1,326.00 per ounce. The price of gold subsequently rebounded in afternoon trading while the U.S. Dollar Index remained firmly in negative territory near a 12-week low.

Despite the encouraging ISM report, speculation of a third round of quantitative easing (QE3) has given a boost to the gold price. Comments from Kansas City Fed President Thomas Hoenig, who told Market News International that another round of asset purchases “may get discussed” by the Federal Reserve if the economic outlook worsens in the months ahead, helped to send the gold price through $1,340 at one point yesterday before it eased back under that level.

Judging by recent history, if QE3 speculation gains enough steam, the gold price may rally in front of any official decision by the Fed.  In November 2010, the price of gold surged to a series of new record highs ahead of the QE2 announcement. As Mark Twain famously said, “history doesn’t repeat itself, but it does rhyme.”

Article provided by GoldAlert.com.


This article is independently provided by GoldAlert.com and does not represent the views or opinions of Goldline International, Inc. Although the information in this article 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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†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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