[www.inewsguyana.com] – The Ministry of Natural Resources and the Environment along with its regulatory agencies for the gold mining and trading business has noted that global gold old prices are posting solid gains and hit a three-week high in early U.S. trading today.
According to a release from the Natural Resources Ministry, a combination of heavy short covering in the futures market, bargain hunting and safe-haven buying are boosting the yellow metal.
The technical posture for gold has also become much less bearish this week. December Comex gold was last up $26.80 at $1,232.80 an ounce. Spot gold was last quoted up $11.30 at $1,233.25.
The local gold mining industry is being encouraged to capitalize on the rise in prices as the sector seek to close out the year on a high for the level of declaration that is currently being recoded.
“Traders are still digesting the dovish Federal Reserve Open Market Committee (FOMC) minutes released Wednesday afternoon. The Fed expressed increasing concern about weakening world economies and some FOMC members questioned whether the appreciation of the U.S. dollar against the other major currencies might act as a drag on the U.S. economy. The U.S. dollar index sold off, while the Euro currency, gold and U.S,” the release added.
Reports are that treasuries and stock indexes rallied in the aftermath of the FOMC minutes. The market place reckons the FOMC minutes hint the Fed may have to hold off longer on raising U.S. interest rates, given the increasing concerns about weakening world economies—especially the serious weakness coming out of the European Union.
European stocks and bonds, and the Euro currency, rallied overnight, in the aftermath of the FOMC minutes and the U.S. stock market rally Wednesday afternoon. U.S. stock indexes were slightly higher in early electronic trading. The U.S. dollar index continued under selling pressure Thursday morning, which is also a bullish “outside market” factor for the precious metals.
According to the Ministry, a key question that will likely be answered in the coming days will be if the FOMC minutes were enough of a market place “game-changer” to reverse the fledgling price downtrends in the U.S. stock indexes
“Ironically, European stocks rallied despite recent dour economic data coming out of the EU. The rally in world stock markets following the downbeat FOMC assessment of the world economies underscores how traders and investors have become addicted to the easy-money policies of the world’s central banks. This is not a good thing, and many market watchers think the eventual outcome of central banks “printing money” will prove to have been significantly harmful or even disastrous to most economies.”
Gold rebounded from this year’s low set Oct. 6 as investors pushed back bets for when the Fed will raise interest rates and Chinese consumers returned from a week-long holiday.
The metal had erased gains for the year last week as an improving U.S. economy added to the case for higher borrowing costs. Rising interest rates reduce gold’s allure because the metal generally only offers investors returns through price gains, while a stronger dollar typically cuts demand for a store of value.