Gold prices this morning are starting to gain slightly against the U.S. dollar, reports Reuters’ A. Ananthalakshmi. Gold bullion is still down 26 percent for the year, but the U.S. dollar dropped after gaining for the last week.
Gold Impacted By The Fed’s Remarks
Over the last eight trading sessions, gold has fallen 12 percent. However, even with today’s gains it hasn’t gotten much above Wednesday’s price which was almost at the lowest level it has been at in three years.
Last week Federal Reserve Chairman Ben Bernanke hinted that the U.S. might begin tapering its massive bond buying program. As a result, the view of gold as a safe haven for investors became damaged. If the Fed does begin tapering off its $85 billion per month bond purchases, then interest rates would likely rise, which would make gold less of an interest for investors.
Updates On Gold Prices
After falling 4 percent on Wednesday, spot gold jumped .5 percent, hitting $12,32.66 per ounce. Comex gold jumped $3 to $1,232.80, which still remained close to the almost three-year lows which were reached in Wednesday’s trading session.
Analysts said that although these low prices for gold should be attractive to investors, a number of institutional investors and funds must close out their positions before quarter’s end. As a result, there could be more sales of gold through the end of the week.
The U.S. Dollar Falls
The value of the U.S. dollar also fell for the first time in more than a week. On Wednesday, officials revised downward the numbers for first-quarter growth in the U.S. Now investors are looking ward the next set of weekly unemployment claims and also statistics on current pending home sales.
A Pause In The Recovery Of The U.S. Economy
If there’s any kind of significant pause in U.S. recovery, then it would be a positive for gold and other commodities. On the other hand, if the U.S. economy continues to recover, gold could be headed to its worst quarterly performance since 1968, if not as early as 1920.