Gold Higher as Stocks Rise
Gold prices got the trading week off on the right foot as the price of gold rose several dollars per ounce today. Gold rise even as stocks traded higher. Gold prices have been trending higher since retesting the $1183 area recently. The gold bulls are starting to gain some momentum, and there are likely more shorts that will get squeezed out before the rally is over.
Investors still seem apprehensive following the volatility seen in recent weeks. Higher volatility and lower stock prices could potentially work in gold's favor. The gold market has several other things in play that may help the bulls right now. In its last remarks, the FOMC sounded a lot more dovish than it did previously. The Fed stated that there are numerous risks to the economy right now including a stronger dollar. The Fed also said that short term rates would remain low for some time. In addition, St. Louis Federal Reserve Bank President James Bullard stated last week that perhaps the Fed should hold off on its plan to end its QE program. This is also considered dovish, and may be one of the reasons stocks were able to turn around late last week.
Demand for physical gold has seemingly picked up as geopolitical risks, economic risks and Ebola potentially fuel some safe-haven demand. Gold had also reached an oversold condition recently, and will likely need to continue to work off that oversold condition before another potential push lower. While the bears still have the edge, the gold bulls are doing their best to squeeze more shorts.
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21 Oct 2014 | Categories: Gold