Tag Archives: gold prices

Gold Prices Surge — Break Key Price Resistance Level

Overnight trading in Asia saw gold prices spike to a three and a half month high, mainly due to drifting expectations of when the United States would raise interest rates. Gold prices were even able to briefly break a key resistance barrier.

The price of gold rose above $1,174 at one point, breaking through August’s high watermark of $1,170 per troy ounce. Many alalysts view this as a critical test for gold prices, as traders often choose to bail out of rallies at such technical benchmarks. These price benchmarks, therefore, tend to act as a ceiling on upwards price swings. Breaking clear of such thresholds usually indicates a stronger price surge to come.

Gold Bullion Coins

Future Interest Rate Hikes in US Driving Price Surge

As a purely financial investment, gold is a non-yielding asset and benefits from low interest rates. Most of the recent demand investment demand for gold is wrapped around the notion that the Fed is unlikely to raise interest rates in the near-term. Worse than expected retail sales figures from the United States have caused the dollar to fall to a 3 1/2 week low. This sign of decreasing consumer demand, coupled with a Fed Beige Book report showing tightening labor markets in the US, is pushing the the gains in the precious metals markets.

 

Gold Prices Sink Awaiting Fed’s Decision

gold-pricesGold prices continued their weeks-long slide, with many traders awaiting the decision of the US Federal Reserve regarding a potential interest rate hike. The biggest question for traders is “does the Fed view the current labor and inflation dynamic as having met their conditions for a hike in rate?” said Erik Gebhard, a co-founder of Altavest Worldwide Trading.

The two-day policy meeting of the Fed concludes this Thursday, with most traders reluctant to make significant bets on gold before learning the result. Consequentially, trading volumes have been low this week. If interest rates are lifted, even slightly, the appeal for gold as an investment vehicle will decline, as gold does not bear interest.

Of course, for investors who are looking to purchase gold as a long-term investment, the news could be welcome, allowing them to purchase physical gold at a cheaper price.