Source: ForexYard
The price of spot gold has received a bit of a bump the last three trading days with the commodity rising 1.6% today. Tensions in Europe could be the usual suspect for today’s price increase though perhaps it is the prospect of additional monetary policy easing in the US that is driving the gains.
The WSJ’s front page article describes the potential collapse of the Italian government but gold prices may be moving higher on additional QE3 expectations. On Friday comments from Fed Governor Janet Yellen made no bones about the Fed’s willingness to go back to the tool chest should risks to growth or price stability emerge. ‘Helicopter’ Ben Bernanke is well known for his position when tackling the threat of deflation in the US economy. Perhaps the events in Europe have been clouding the landscape and only now market players are turning their attention to a more strategic play in gold for an additional round of US policy easing.
Gold prices recently performed a ‘bear trap’ when the price of spot gold fell below its rising support line from the September 28th low only to pull higher the same day and continue to advance higher to test the $1,695 level. Should the price continue to move higher there are retracement targets located at $1,725 and $1,771. Support comes in at the October low of $1,603.
Read more forex trading news on our forex blog.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.
