Thanks a bullion Ben, you've given gold its best start since 1980
Bloomberg reports gold traders are upbeat about the prospects for the gold price for the fourth week in a row after the Fed's interest rate move gave gold the best start to a year since 1980.
In late trade on Friday gold for delivery in February exchanged hands for $1,737.60/oz building on the $45 kick it received on Wednesday from Ben Bernanke's decision to hold interest rates at levels near zero until end-2014.
Gold has risen 10% since the start of the year, rebounding from the first quarterly decline in three years and scaling the $1,700 an ounce level for the first time since December 9.
Bloomberg reports 9 of 15 traders it surveyed expect prices to gain next week as the value of gold held in exchange-traded products ballooned by $3.9 billion, a three 3-month record:
"The trigger offered by the Fed definitely helped," said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt. "The opportunity costs of holding gold will remain low in the future and this should boost the attractiveness of gold. We don't see an end to the long-term uptrend in gold prices."
Reuters reports gold appeared to lose its appeal as a safe haven towards the end of 2011:
UBS analysts said the market attitude toward gold has largely been cautiously optimistic after the metal fell 10 percent and briefly entered a bear market in the fourth quarter.
"A fresh catalyst was needed and we think the FOMC outcome on Wednesday fit the bill. More accommodative policy is a very good foundation for gold to build on the next move higher," the Swiss Bank said in a note.
Speculation that the Fed will eventually undertake QE3 are mounting which should keep bullish momentum going for gold prices.
However, the gold price remains well below the previous record high for gold set on Jan. 18, 1980 when, adjusted for inflation, the precious metal traded at $2,400 an ounce.