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Central Banks Stimulate Growth, Benefiting Precious Metals

October 4, 2012 at 21:51 by Vladimir Vyun

Gold jumped today to the highest level this year on hopes that efforts of central banks will spur inflation, increasing demand for precious metals. Silver, platinum and palladium followed gold to the upside.

European Central Bank President Mario Draghi kept the key interest rate unchanged at 0.75 percent and reiterated that the bank is ready to start its bond buying program. The bank should buy sovereign bonds on secondary markets, avoiding direct injection of capital in indebted nations and thus it will avoid breaking of the treaty, which forbids the central bank to give money to EU members. The Federal Reserve released the minutes of its last policy meeting, confirming that the majority of the board members agree on keeping the policy accommodative for a prolonged time.

The stimulating measures from the central banks are positive for precious metals. They should spur growth and inflation, increasing the appeal of the metals as a store of value.

Gold jumped from $1,780.38 to $1,789.46 per troy ounce as of 21:41 GMT on COMEX today, while its daily maximum of $1,795.02 was the highest since November 11, 2011. Silver was up from $34.67 to $34.90 per ounce. Platinum gained from $1,690.50 to $1,716.36 per ounce today, touching $1,719.75 — the high not seen since February 29. Palladium advanced from $653.75 to $669.58 per troy ounce.

If you have any questions and comments on the commodities today, use the form below to reply.

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