By Russell Glaser – Spot gold prices fell from their record high following rising Chinese exports and positive comments from Fed Chairman Ben Bernanke. This helped to reduce the level of risk aversion in yesterdays trading as traders bought riskier assets, shunning safe-haven assets such as spot gold and the U.S. dollar.
The price of spot gold fell yesterday and continued its decline into the afternoon hours of today’s European trading session. Spot gold is currently trading down at $1224 from an opening day price of $1230.60. This is off from Tuesday’s record high price of $12156.70.
Due to the positive sentiment, traders bought higher yielding assets such as the euro, spot crude oil, and equities.
Higher yielding currencies and equities were in favor yesterday after the release of a report showing Chinese exports rose a whopping 50% in the month of May.
Also Ben Bernanke’s testimony before Congress helped to increase trader’s risk appetite. Bernanke forecasts the U.S. economy to grow between 3%-4% this year. The Fed chief also expects consumer and business spending to make up for the end to the government stimulus in the economy. Bernanke said he did not understand the surge in the price of gold given the declining price of other commodities but identified with investor need for safe-haven asset in times of market uncertainty.
Over the past 5 months, spot gold prices have risen to record levels as the European debt crisis unfolded. Fears of a restructuring or a default in the debts of Greece, Portugal, Spain, and Hungary have driven investors to seek safe haven assets.
Short term price declines in spot gold may continue if further positive economic data is released, driving traders to riskier assets. The near term support levels for spot gold trading rests at $1219, followed by a range between $1192 and $1197.
Forex Market Analysis provided by Forex Yard.
© 2006 by FxYard Ltd
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