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Will Fed Ease Policy Again? Gold Bulls Hope So

October 1, 2012 at 16:37 by Vladimir Vyun

Gold rallied today, touching the highest level since February, on speculations that the monetary easing in the United States may lead to excessive inflation. Other precious metals followed gold in gains.

Federal Reserve Bank of Chicago President Charles Evans said that the US central bank is able to bolster the economy further. Evans explained that he does not expect inflation to fall below 7 percent until 2014, giving additional incentive for the central bank to stimulate growth. Yet stimulating measures may lead to surge of inflation that would be negative for economic growth.

The outlook for the US employment data, which will be released later this week, is not very optimistic, supporting speculations about additional stimulus from the Federal Reserve. Employment growth is expected to be at 111,000. That is just slightly above the previous figure, which was considered disappointing. Furthermore, the unemployment rate may rise by 0.1 percentage point to 8.2 percent.

Gold climbed from $1,764.48 to $1,777.40 per ounce as of 16:31 GMT on COMEX today, while its daily high of $1,791.52 was the highest since February 29. Silver advanced from $34.14 to $34.70 per ounce, touching $35.33 intraday — the highest since March 2. Platinum was also higher, rising from $1,646.25 to $1,675.50 per ounce.

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