Gold Is Up at the Close of July

Gold closes out July with a gain of more than 7 percent. This month has been a tremendous one for the yellow metal. Now moving into August, it seems recent word from the Federal Reserve may help gold prices moving forward. Here is a look at this week in gold.

Largest One Month Gain in over a Year

After three consecutive months of declines, some believe gold is beginning to turn around. This month gold settled around $70 per ounce higher than when it started. Most of the short term dips can be attributed to the ongoing speculation of when the Federal Reserve will begin tapering the economic stimulus program. Unemployment reports and other job data reports typically weigh heavy on gold’s performance. When the Fed gives a brief mention as to when the tapering of the economic stimulus will happen, it has an immediate effect on the price of gold. This knee-jerk reaction appears to be easing up.

More Quantitative Easing – Gold Remains Indifferent

On Wednesday the Federal Reserve gave mention once again to not knowing when quantitative easing would begin tapering. Now it looks as if September may be too soon to start easing off on bond purchases. Typically, this would be good news for the yellow metal and the price of gold would be up for the day. What’s unique about Wednesday’s news is the fact nothing of substance happened to gold. Gold was actually down for the day, but ultimately by morning of the next day – prices were back up again. This could be a sign that news from the Federal Reserve may be losing its power on the yellow metal. There’s been so much back and forth in the past few months thanks to the Fed that investors may simply be getting tired of it.

Looking Outside the Fed

Thursday gold slid more than $10 per ounce of its opening price. This was on the back of the US Dollar Index being lifted from a 6-week low. As the dollar prospers, gold tends to momentarily suffer. Are investors beginning to pay more attention to news outside of the Federal Reserve? Naturally there are many factors that will determine the price of gold over time. Supply and demand, inflation and dozens of other socioeconomic variables all come into play. The question here is if investors are starting to pay less attention to word from the Federal Reserve and more attention elsewhere.

References: BloombergReutersCNBC