For the first part of the week gold had trouble breaking past the $1400.00 per ounce mark. Today, gold has had no trouble staying above this barrier. Recent GDP data released as well as buzz around U.S. economic stimulus may be to thank for this recent jump.
GDP and Unemployment Assistance
According to the Department of Labor, people who file for unemployment rose by 10,000 up to 354,000. This came as a small surprise considering most had expectations of this number dropping closer to the 340,000 range. Furthermore, the U.S. Commerce Department stated the gross domestic product was actually down to 2.4% instead of a preliminary reading of 2.5%. Another small surprise considering most had expected it to remain unchanged.
Shaky economic data such as this is typically good news for precious metals. Investors see signs of a troubled economy and often flock to gold for a certain level of protection. Whether this data is enough to hold gold prices at current levels will be seen in the coming weeks.
Fed May Continue Stimulus
While some were expecting Ben Bernanke to slow the $85 billion per month quantitative easing last week, we only heard Bernanke say the stimulus would slow down if the economy showed sustained signs of improvement. Given the above GDP data, it seems the Federal Reserve will now think twice before putting an end to the economic stimulus. This $85 billion monthly stimulus plan from the Federal Reserve has been a strong catalyst for gold. Even whispers about whether it will continue or not can severely sway the price of gold. For an outlook on the next move in gold, pay attention to the next Federal Reserve meeting in mid-June.
Monetary policy and economic progress will certain shape the future of gold in the coming months. Typically, the summer months are a slower time for gold, but one should not discount the possibility of another 2011 when gold reached its high.
If you are curious about adding precious metals to your retirement account American Bullion can help. Reach out to us today and speak with one of our knowledgeable specialists. Remember, you can roll over or transfer any portion of your existing IRA or old 401(k) from a previous employer into a precious metals IRA. The rollover is tax-free and hassle-free. Call 1-800-326-9598 to speak with an American Bullion precious metals specialist.