Gold prices jump driven by good demand
Gold prices rebounded Tuesday from yesterday’s losses but pared gains late in the session to show very modest gains for the day. December gold traded up to a daily high of 1777.9, after economic data was released in the U.S.
Home prices in the U.S. edged higher for a sixth straight month while home prices rose for the seventh straight month according to the FHFA monthly home price index.
In a separate report, consumer confidence rose to the highest reading in seven months in September. Although the data points were seen as a positive , many point to the fact that with the Fed enacting QE3, how good are things really with unemployment still stuck above eight percent. In fact Philadelphia Fed President Charles Plosser echoed some of these sentiments today in a speech in which he said that “QE3 will not do much to lower unemployment or boost economic growth.” Commodities fell after Plosser’s comments including energies, indices, as well as metals. European shares ended slightly higher after ECB President Draghi defended the central bank’s latest bond buying program after a meeting with German Chancellor Merkel. Worries over Spain’s funding issues continue to weigh on markets however.
Gold is on pace for a five percent gain this month if we stay at current levels. After making new highs up at 1790 on Friday, we have seen some consolidation back in to the mid 1760 area. To me not much of a surprise given that we are at month and quarter end. Heading into tomorrow we have readings on new home sales, energy inventories, and a 5 year note auction.
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