Gold gaps higher again after US output drops first time since Sep 2009
The gold price gapped higher on Thursday on solid volumes scaling the $1,350 an ounce level for the first time since September 19.
In midday trade on the Comex market in New York December gold futures changed hands at $1,351.80 up $17.10 or 1.3% from yesterday’s close, near its highs for the day.
Volumes were solid with 110,000 contracts traded by 12:45 EDT compared to the average daily number of futures dealings of around 170,000.
Gold was boosted Thursday following further bad news on the US job front and weaker than expected manufacturing data in the world’s largest economy.
According to analysts Markit, the US manufacturing PMI, a gauge of economic activity, fell sharply from 52.8 to 51.1 in October, “reflecting the first drop in output since September 2009“.
The gold price’s current uptrend was sparked by Tuesday’s worse than expected official payroll data which hurt the dollar and boosted gold, which usually moves in the opposite direction of the US currency.
The US Federal Reserve wants to throttle back its stimulus program running at $85 billion a month and the anemic nature of the US economic recovery bolsters the case for keeping the easy money spigot open.
The Fed’s quantitative easing or QE program is set to top $4 trillion by the end of the year and all that easy money inundating financial market has burnished gold’s reputation as a hedge against inflation and a storer of wealth.
The gold price has increased more than 50% since QE1 when the ruling price was $837 an ounce.
Thursday’s steady climb: A close above $1,350 will be very bullish on a technical basis
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