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Gold Recovers to September Levels on Continued CHF Turmoil

January 16, 2015 at 17:07 by Andriy Moraru

Gold is currently showing a second day of robust growth amidst the financial turmoil caused by the Swiss National Bank’s decision to remove the franc’s floor against the euro and to lower the target interest rate to negative 0.75%. The metal is also aiming for the biggest weekly gain since February.

Traders are seeking a safe haven asset to park their funds following a financial markets disaster that ensued yesterday after the Swiss franc had shown an instantaneous appreciation by about 30 percent. This has caused spikes in various non-CHF currency pairs too. Additionally, the increased volatility has caused insolvency for two big Forex brokers — Alpari and FXCM; the latter being a NYSE-traded company. Gold is a natural hedge against financial uncertainty and it is definitely benefiting from this role today.

The precious metal is also gaining from the market participants’ expectation of the quantitative easing program for €500 billion that is rumored to be announced by the European Central Bank on January 22. A boost of liquidity will push the demand for gold as an investment.

Spot gold is currently trading near $1,277.40 per troy ounce as of 17:06 GMT today after opening at $1,225.55. The daily high of $1,282.11 per troy ounce is the maximum level since September 2.

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

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