Futures Market News
Gold futures forecast to continue surging higher
Sep 21, 2012 02:10 PM
Gold futures were circling back toward the milestone price of $1,800 per troy ounce on Friday, achieving gains spurred by anticipations of growth and development enhancing liquidity, according to Reuters.
Stimulus programs announced earlier this month by the U.S. Federal Reserve, the European Central Bank, the Bank of Japan and China via its sizable infrastructure program helped drive the yellowish metal toward a fifth consecutive week of gains. The U.S. Federal reserve announcing it is embarking on a third round of quantitative easing was highly anticipated.
Gold also was boosted by financial markets appearing more healthy as the shared currency of the European Union was on the rise in the aftermath of efforts to spur global economies.
"QE3 was a bit of a game-changer for a lot of people. People are having to think seriously about where they put their money," chief executive officer Ross Norman with bullion broker Sharps Pixley told the news source, noting that milestone price is well within striking distance. "Gold does seem to have taken on a life of its own now. We think we might see $1,800 in the next couple of weeks or so."
At 12:33 p.m. on Friday, gold futures gained 0.41 percent, a $7.30 gain to $1,777.55 per troy ounce.
Japan jumps in
The central bank of the Pacific Rim nation committed to monetary easing earlier this week, following up the Fed's announced plan to purchase $40 billion-worth of mortgage-backed debt per month.
That followed the European Central Bank indicating it would move forward with the purchase of bonds for 17-nation bloc countries victimized by the sovereign debt crisis.
And last week, the People's Bank of China announced it was embarking on the equivalent of roughly $150 billion in infrastructure projects.
The Bank of Japan earlier this week committed to grow its fund for asset purchases, entering the nation hosting the globe's fourth-largest economy among the central banks aiming to spur growth.
Bullion's climb 'has fewer barricades'
The move by the U.S. Federal Reserve is forecast to significantly benefit the yellowish metal.
"With the open-ended scheme to print as much dollars as needed until the U.S. economy recovers, gold's uptrend has fewer barricades on the way at least to earlier highs," senior analyst Pradeep Unni with Richcomm Global Services told Reuters. "Charts hint at a major resistance at $1,787-$1,790, where we have failed thrice earlier. Thus, consecutive closing above $1,790 will be a necessity to avoid a correction."
Gold earlier this week touched its top price in more than six months, according to Forbes.
Dollar index slides
The U.S. Dollar Index – a metric that gauges the value of the world's reserve currency against six competing currencies – increased moderately from closing on Thursday to Friday morning, Forbes reports.
That prompted gold to climb as the two typically perform the inverse of one-another.
Gold also has a tendency to track the upward drive of the common currency of the European Union, which benefited Friday from speculation that debt-hobbled Spain is preparing to request bailout help for its troubled banks.
And the yellowish metal's climbs are forecast to continue, a Bloomberg poll reveals.
Bullish streak projected
More than half of 29 analysts polled by the news service said gold's price will continue driving higher next week.
Fifteen said gold's price will climb while seven said gold will lose value. An additional seven remained neutral on the matter.
"Gold is one of the commodities that will benefit most from quantitative easing," commodities sales head Kamal Naqvi with Credit Suisse Group AG in London told Bloomberg. "Everyone is talking about gold at $2,000 an ounce and I still think we'll get to at least that."
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