Gold futures increased amid expectations for stimulus policies

Gold futures traded higher this Monday, as expectations for the Federal Reserve and the European Central Bank to continue their easy monetary stimulus policies continued to support sentiment.

Gold futures may rise on such easy money environments because of expectations that large liquidity put a damper on the value of paper currencies.

On the New York Mercantile Exchange Comex division, gold futures for June delivery traded at 1,470.95 USD a troy ounce, up 0.45% on the day.

Comex gold prices traded in a rage between a daily high of 1,478.15 USD a troy ounce and a session low of 1,467.85 USD a troy ounce.

Gold prices were expected to find support at 1,439.75 USD a troy ounce, which is the low from April 25 and to find near-term resistance at 1,487.15 USD, which is Friday’s high.

The US department of Labor reported on Friday that the economy added 165,000 jobs in April, which is higher than expectations for an increase of only 145,000.

The US unemployment rate dropped unexpectedly to a four month low of 7.5% from 7.6% in March.

The Federal Reserve recommitted to its 85 billion USD a month asset purchase program and reported it could increase or decrease the monthly amount, according to the inflation and employment outlook.

Changes in gold prices the past year have largely tracked shifting expectations as to whether the US central bank will end its bond-buying program earlier than expected.

Elsewhere in Europe, the ECB cut interest rates to 0.5% from 0.75% due to concerns over the declining economic outlook for the euro zone.

Gold prices have recovered lately from a massive selloff in April. Comex gold dropped to a 27 month low of 1,322.25 USD an ounce on April 16.

Since April 16, gold has increased about 10% as investors returned to the market seeking cheap valuations.

FacebookTwitterGoogle+LinkedIntumblrStumbleUponPinterestDiggRedditEmail

Leave a Reply