Signup for our free newsletter:

Gold Outlook Positive Again

Written By Brian Hicks

Posted July 31, 2012

Gold experienced a bit of brightness recently, rising around 0.5 percent on Friday in New York. That meant a jump of $7.80, and it closed at $1,623.40 an ounce.

Although the national GDP beat expectations for the second quarter—1.5 percent instead of the anticipated 1.2 percent—this is a double-edged sword since it reduces any hopes of the Federal Reserve undertaking any further quantitative easing in the short term.

Just in advance of this news, gold was at $1,628.60 an ounce.

Gold levels also are in a holding pattern since investors are eagerly eyeing European and American central banks to offer some clarity regarding quantitative easing prospects.

Monday, gold stayed consistently above $1,620 per ounce. General business data coming out of the European region has caused the euro to experience heightened pressures.

It is expected that gold outlooks will be bullish in the coming quarter, meaning an increased expectation of inflation. Gold would become a hedge bet against rising prices.

Investors are once again turning toward gold as a safety measure against the bucking of the market. That trend is coming back and looks likely to persist.

The ECB is convening Thursday to discuss policy matters. In the aftermath of Draghi’s explicit promise to “do everything” in order to protect the Eurozone’s integrity, the markets have seen increased speculation of heavy policy movement.

At some point, the Fed is expected to do some more quantitative easing. The question is when.

US gold futures for August are at $1,620.70 an ounce, while spot gold has hovered between $1,530 and $1,640 per ounce over the past two months.

Meanwhile, over in Asia, governments are tightening their hold over internal gold by raising legislative standards. Vietnam may shortly prohibit anyone from taking bullion outside country limits, while any jewelry exceeding 300 grams would have to be submitted to customs and taxation.

Gold is on a high as it enjoys privileged status in a market that’s lost its mind and hasn’t yet recovered it.