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PRECIOUS METALS: Gold Inches Higher, Spurred by Fed Easing

Wall Street Journal - Sep 14, 2012

Gold futures eked out a new six-month high as optimism for demand remained strong in the wake of the Federal Reserve's newest monetary-easing initiative.

The most actively traded contract, for December delivery, gained 60 cents to settle at $1,772.70 a troy ounce on the Comex division of the New York Mercantile Exchange.

"This is unusual and constructive," said George Gero, senior vice president of RBC Wealth Management, in an email. "We expected profit-taking after the large rally" the day before, when gold surged 2.2% to settle at $1,772.10 a troy ounce.

The U.S. central bank said Thursday it will continue its current monetary-easing measures and enact a fresh round of mortgage-bond buying that could continue until employment improves.

Gold can get a double boost from monetary-easing policies. First, increased liquidity can weaken the dollar, making dollar-traded metals less expensive to buyers using other currencies. The Wall Street Journal Dollar Index, which tracks the dollar against a basket of other currencies, was recently down 0.3% at 68.998.

Second, central bank efforts to increase the amount of cash in the financial system fuel fears of inflation. These worries can lead investors to transfer their wealth to nonliquid assets, like precious metals.

Read Full Article from Wall Street Journal

- Posted: 2012-09-14 22:24:00

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