The price of spot gold has received a bit of a bump the last three trading days with the commodity rising 1.6% today. Tensions in Europe could be the usual suspect for today’s price increase though perhaps it is the prospect of additional monetary policy easing in the US that is driving the gains.
The WSJ’s front page article describes the potential collapse of the Italian government but gold prices may be moving higher on additional QE3 expectations. On Friday comments from Fed Governor Janet Yellen made no bones about the Fed’s willingness to go back to the tool chest should risks to growth or price stability emerge. ‘Helicopter’ Ben Bernanke is well known for his position when tackling the threat of deflation in the US economy. Perhaps the events in Europe have been clouding the landscape and only now market players are turning their attention to a more strategic play in gold for an additional round of US policy easing.
Gold prices recently performed a ‘bear trap’ when the price of spot gold fell below its rising support line from the September 28th low only to pull higher the same day and continue to advance higher to test the $1,695 level. Should the price continue to move higher there are retracement targets located at $1,725 and $1,771. Support comes in at the October low of $1,603.
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Russell Glaser is a Currency Analyst with ForexYard. Russell provides analysis in the FX spot market by employing fundamental research methodologies. In addition to currencies, Russell closely follows the correlation between the Commodities market and the movement of equities. His writings have been published on the ForexYard Trading Blog and associated partner sites. Prior to joining Forexyard, Russell Glaser served as a management consultant in the financial services industry, advising Fortune 100 companies. Russell holds a degree in finance from the Fisher College of Business at The Ohio State University.
