Gold price jumps to 3-week high after US data disappoints
The gold price jumped as much as $17 an ounce on Monday after retail sales in the world’s largest economy came in much lower than expected, raising the prospect that the US recovery may be stalling .
The price of gold dipped to $1,273 at the open, but then shot up to a day high of $1,294 after the weak data prompted forecasters to pare down GDP expectations for the US to a tepid 1%.
If the US economic recovery proves less robust, the US Federal reserve may take longer to throttle back it quantitative easing program.
Gold’s recent weakness has been on the back of comments from Fed officials hinting that the QE program may be dialed back before the end of the year.
When the Fed starts tapering off QE, which floods markets with cheap money, it will further strengthen the US dollar and tarnish gold’s status as a storer of wealth.
The first QE program was announced by Bernanke in December 2008 when an ounce of gold cost $837.50.
Bernanke has poured more than $3 trillion of easy money into the US since December 2008 when Q1 kicked off and the pile continues to grow at a rate of $85 billion a month.
If left unchecked the US central bank’s balance sheet will top $4 trillion by the end of the year.
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