The price of gold jumped just over 1 percent today to reach a spot price of just over $1,338 an ounce. Gold futures rose as well, with contracts slated for December 13 delivery rising just over 1 percent.
Gold spot price responds to stimulus outlook
The rise in the price of gold corresponded with comments from a Federal Reserve Bank President that could indicate that the Fed's bond-buying program will continue for the forseeable future.
“I can’t have tremendous confidence in our economic situation,” said Federal Reserve Bank of Chicago President Charles Evans today in Oslo. “A lot of developments are still under way. At the moment, the data doesn’t provide us with confidence to make major adjustments...”
Quantitative easing, the Federal Reserve's bond-buying program, leads to a weaker dollar and subsuquently bolsters gold prices. However, the wide-spread belief that the Fed is planning on "tapering," reducing the $85 billion monthly purchase slightly as the economy continues to improve, has lead the price of gold to plummet over the last month. However, the current fight in congress over Obamacare, the threat of a government shut-down, and the potential for another debt ceiling fight appear to have given gold bugs new hope.
“Evans’ remarks are moving the market,” said global trading director of Kitco Metals Inc. Peter Hug in a report. “The focus of the market remains on the debt-ceiling impasse.”
Gold futures remain uncertain
However, whether the taper is coming in the near future or not continues to be the source of some debate. Gold was up sharply on September 19 when the anticipated taper didn't initially materialize. However, comments from St. Louis Bank president James Bullard seemed to indicate that it could be expected as early as next month, leading to another retreat in price. Gold has lost over $55 since the end of August.
Silver futures also fell today, with contracts for December 13 delivery shedding almost 0.4 percent.
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