Los Angeles, CA – Comex gold futures are trading significantly higher this week on news from the Federal Reserve’s FOMC minutes released on Wednesday. The yellow metal reached a fresh four-month high after the Fed’s notes were construed by investors as a sign that monetary stimulus by the central bank is imminent. Spot Gold rose up almost $30.00 to $1673.00 an ounce or approximately 1% higher by Thursday morning. September Comex silver also traded up $.67 to $30.22 an ounce.
This week the market place continues to digest the news from the Federal Reserve. FOMC members stated they are ready to implement further monetary stimulus if the U.S. economy should continue to weaken. As a result, the commodity markets took a bullish upswing, including precious metals. In addition, the effect of the FOMC news caused the U.S. dollar to drop to a fresh four-month low. The greenback bears have gained the slight short-term technical advantage based on a four-week-old downtrend. At the same time, crude oil prices have firmed Thursday morning to nearly $100 a barrel, a three-month high. A lower U.S. Dollar and higher crude oil prices are two key “outside market” factors that push the rise in Gold prices.
Outside the U.S., the Asian stock market rallied on the renewed hopes of another quantitative easing (QE3). However, this week there was a weaker-than-anticipated manufacturing sector report that came out of China. The HSBC manufacturing purchasing managers’ index came in at the lowest reading in nearly 9 months. Meanwhile, Euro stocks moved down from their highs when the EU reported its own weakening purchasing managers’ index; the type of news that would suggest the euro-zone is moving back into a recession. Negative global economic news causes many investors to seek safe-haven investments, typically found in precious metals like gold and silver.
Many investors and financial analysts will look toward the next Fed meeting for the announcement of additional monetary easing. In addition, the Bush-ERA tax cuts are set to expire at the end of 2012, which is a major economic concern that the government will raise taxes and simultaneously cut spending – causing the so-called fiscal cliff. Because of these worries, many investors have decided that protecting their assets with commodities such as gold and silver is a wise choice. The gold bulls’ next breakout price is set at a technical resistance of $1678.00; psychological support rests at $1611.00 an ounce. For silver, resistance is seen at the overnight high of $30.55 an ounce, and support at $29.50
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