Gold Up on Fed Stimulus Hints

Reuters reported that gold was up on Thursday following a Fed policy meeting which hinted at another round of stimulus in the near future. Gold is up 3 percent on the week so far, at $1,663.80.

As quoted in the market news:

Analysts said while the prospect of additional stimulus was positive for gold in the near term, key indicators like consumer spending, manufacturing or jobs growth since the Fed’s last meeting pointed to a more robust phase of economic growth and as such, gold’s gains could be limited.

Spot gold was up 0.6 percent at $1,663.80 an ounce by 1332 GMT, having risen 3 percent so far this week. That has put the price on track for a 3.1 percent gain in August, which would be the largest monthly gain since January’s 11 percent increase.

David Jollie, Mitsui Precious Metals analyst commented:

The default action has changed from do nothing to do something. This means that we can expect to see some action soon, but the latest minutes imply the Jackson Hole and the September 12-13 meetings are not likely to see QE3 launched.

(That) suggests some of the current strength is unjustified or at least premature, even though the prospects of further QE seem to have grown significantly. However, poor U.S. economic news is now likely to be greeted as potentially opening the door to further quantitative easing.

Click here to read the full Reuters report.