Fear of European debt contagion was compounded by the recent minutes from the Federal Reserve’s last open market call today, elevating the price of Gold futures to record levels. Gold added $23 an ounce on Wednesday, reaching new heights as further economic stimulus and potentially inflationary assistance measures sounded investor alarm. Gold bullion reached $1580.50 per troy ounce, wiping away the former record of $1577.40 per troy ounce and bringing gold miners and ETFs along for the ride. The five month flight for Gold bullion is the longest on record, slowly dispelling claims by analysts and stock gurus that the gold bubble would be fleeting. The notion that the current state of the economy lends itself to prolonged high gold prices is strengthening and consequently, so are the related ETFs and mining stocks.
This trend appears on track to continue as investors swat away concerns with the level and severity of the increases in metal. Rather, gold represents a safe haven from the declining greenback, temperamental stocks and the impact of the Federal application of new and untested means to stimulate growth being discussed in case of continued economic weakness. Especially worrying for investors today was "QE3," the additional round of asset purchases introduced today by Ben Bernanke called QE3.
Bernanke’s suggestion of the measures is being taken to indicate that the current debt situation and prolonged weakness is serious enough that these emergency procedures must be seriously discussed and considered. Naturally, gold and other metals absorbed that fear in the form of rising prices.
SPDR Gold Shares (GLD) the most extensively traded ETF for the precious metal added nearly a percent to reach its own all-time-high of $157.71 during intraday trading. Heavy volume throughout Wednesday and a preceding 7 day rally brought the gold bar backed ETF to a new level of resistance after breaking through the $153.71 buy point.
IShares Silver Trust (SLV) also rose alongside gold and began trading above its 50-day moving average for the first time in months. Futures prices have not closed as high as $38 since May 31, and analysts are predicting silver may be readying itself to match the current strength of the gold rally.
Miners were also naturally higher after being hard-hit earlier in the month. Leading the pack was Barrick Gold (ABX), which continued to edge higher to its 52-week highs, followed by an impressive performance by Gold Corp. (GG). Eldorado Gold (ELD) also traded strongly today, a trajectory that is likely to continue in tomorrow alongside Moody's most recent threat to lower the U.S. credit rating.
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