Gold prices have jumped to a new record high on Wednesday as spot price for December deliveries reached around $1,298 per ounce on the New York Mercantile Exchange.
Gold prices have tapered off since but it no doubt may exceed $1,300 per ounce in the coming days as the commodity’s appeal as an alternative investment and as a dollar hedge has driven up its price.
Wednesday’s Federal Open Market Committee (FOMC)’s statements regarding the state of the U.S. economy suggests that the Federal Reserve may flood the market with U.S. dollars by purchasing assets. The dollar fell against most foreign currencies, to its lowest point since March, on Wednesday.
FOMC also indicated that it may keep interest rates low, between 0 and 0.25 percent. Gold prices have typically moved inversely against the value of the dollar.
BNP Paribas analysts raised their forecast for gold prices to $1,200 per ounce on average in 2010 and $1,290 per ounce in 2011, pointing to a weak dollar. “The increase in the price should continue to be driven by safe-haven demand, motivated by sovereign risk and economic uncertainty,” BNP analyst Anne-Laure Tremblay wrote in a note on Wednesday.
Gold prices have tapered off since but it no doubt may exceed $1,300 per ounce in the coming days as the commodity’s appeal as an alternative investment and as a dollar hedge has driven up its price.
Wednesday’s Federal Open Market Committee (FOMC)’s statements regarding the state of the U.S. economy suggests that the Federal Reserve may flood the market with U.S. dollars by purchasing assets. The dollar fell against most foreign currencies, to its lowest point since March, on Wednesday.
FOMC also indicated that it may keep interest rates low, between 0 and 0.25 percent. Gold prices have typically moved inversely against the value of the dollar.
BNP Paribas analysts raised their forecast for gold prices to $1,200 per ounce on average in 2010 and $1,290 per ounce in 2011, pointing to a weak dollar. “The increase in the price should continue to be driven by safe-haven demand, motivated by sovereign risk and economic uncertainty,” BNP analyst Anne-Laure Tremblay wrote in a note on Wednesday.
