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Price of Gold Slid 1 Percent Today

The price of gold dropped one percent today on news of oil declines of 3 percent. Oil prices have slumped for two days in a row. Goldman Sachs is advising its customers to sell investments in oil, platinum, copper, and cotton. Goldman argues that record levels of speculative trading of crude has push prices in these commodities too high. The world’s biggest commodity trader recommends selling for the near future. Three years ago Goldman shock some investors up by claiming oil would see a “super-spike” forcing prices to $200 per barrel by 2010.

On Tuesday Paris-based International Energy Agency raised alarm by stating “there are real risks that a sustained $100-dollars-a- barrel-plus price environment will prove incompatible with the currently expected pace of economic recovery”. They also warned that recent high oil prices have hurt global demand for energy. In addition the International Monetary Fund warned Monday that high oil prices were a key risk factor to global economic recovery.

In today’s trading Brent crude fell 2.6% to $120.73 and finally settled at $120.94 in the afternoon. Gold fell by 1%, platinum fell 1%, Copper fell 2%, sugar fell 2%, and wheat fell nearly 3%.

Will Gold Hit $1500 an Ounce?

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Gold speculators and traders have wondered for a while now whether gold will reach $1500 an ounce in the near future. The gold market like other investments doesn’t move in straight lines but rather in waves of up and down activity. This presents a unique opportunity for gold investors to profit on the short term as well as get in at a good price to make some immediate gains. All of this gold trading activity is especially prevalent when there is a lot of volatility in the currency and commodity markets like we are seeing recently.

Here are several of the top reasons we should see gold hit $1500 and ounce and above in the near future.

#1 The declining U.S dollar: As the dollar declines the price of gold has traditionally gone up. Frank Holmes the CEO and chief investment officer of U.S. Global Investors says, “Gold is attractive as a safe haven when the dollar is declining.” As the U.S deficit continues to grow it puts additional strain on the Dollar as the worlds reserve currency. All of this pressure on the dollar creates a need to seek additional investment opportunity in alternative as investors seek out other currencies and markets to put their money in.

#2 Inflation: The price of goods services and the continual rise of these prices, coupled with the increasing price of oil and other commodities has a tendency to drive people toward investing in gold. Putting money in gold has is typically seen as a safe place to invest money when there is an inflationary environment. Russ Winter of the financial blog Minyanville believes, “if the Fed keeps buying $100 billion of Treasuries until July 1, you can calculate that each $100 billion will push the commodity index up another 5% and the price of oil $7.00 a barrel.

#3 Increase in Oil Prices: when oil producing nations begin reaping record profits they often invest their excess capital in gold. With the general consensus believing that oil prices will continue to go up the outlook for continually increasing gold prices looks optimistic. Frank Holmes has believes that oil and gold have an approximate 75% correlation to each other. “This means that 3/4 times, when prices for one go up, prices for the other increase as well,” Holmes writes.

The general consensus is that  the price of gold and oil are very likely to continue going up through the final months of “quantitative easing” QE2. Gold prices should continue to follow closely with other commodity prices. As geopolitical events continue to unfold in the Middle East precious metals should benefit.

 

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    Gold Prices Hit Record High

    gold coinGold prices reached a record high today ($60 an ounce increase) after Ben Bernake, chairman of the Federal Reserve chairman announced that they would plan to purchase an additional $600 billion in bonds to prevent deflation of the U.S dollar. This news was unexpected since many investors thought the FED would purchase only 300 billion in bonds. Gold reached a price of $1384 on trading today and silver prices surged to $26.04 an ounce on the news. Gold for December delivery closed up $45.50, or 3.4%, to $1,383.10 an ounce.

    The Federal Reserve’s additional $600 billion monetary stimulus goal is to stimulate the economy by expanding the money supply. However, detractors of the plan express doubts that  this will drive down the value of the dollar without creating growth.

    Many countries expressed doubt over the FED news… Rainer Bruederle, Germany’s Economy Minister said today that he was concerned at U.S. efforts to stimulate growth by injecting liquidity into its struggling economy.

    In a Chinese commentary piece in the Financial News Xia Bin said, “as long as the world exercises no restraint in issuing global currencies such as the dollar — and this is not easy — then the occurrence of another crisis is inevitable, as quite a few wise Westerners lament,” he said.

    Gold Declines 1 Percent On Fed Stimulus News

    Gold prices dropped one percent on news from the Federal Reserve that they would purchase less government debt than originally expected to stimulate growth. The price of gold has declined sharply in relation to a stronger dollar falling back from it’s high of $1380 an ounce earlier this month. The price of gold today hovered around $1322.00 an ounce.

    On Wednesday analysts at MF Global said in a note to clients that, “Wall Street may have overplayed its expectations of quantitative easing.”

    The Wall Street Journal mentioned that the Fed’s purchase of treasury bonds will most likely be in the few hundred of billions rather than up to a trillion as some analysts has anticipated. The news sent the dollar higher and strengthened the currency throughout its trading session.

    U.S. FED authorities plan on meeting next week to discuss policy decisions which will impact the direction of the FED policies for the near future.