Is gold showing signs of QE inevitability?
Gold prices scored broad-based gains on Friday hitting the second biggest monthly gain this year, as investors interpreted Bernanke’s jaw-boning to be opening the door for more quantitative easing. Looking back in gold’s performance this year, this is a quite surprising price movement. Starting in May, gold prices have risen on each and every hint of fresh money printing in the US, only to turn negative each and every time the Fed disappointed. This time, however, gold rose despite Bernanke’s damp squib, indicating that no matter what the US central bank says, another round of quantitative easing may be inevitable and the typical autumn rally in gold could be very much in train. With the yellow metal currently hovering just below the psychologically important level of$1.700, there is plenty of room to the upside, all the way up to February’s highs at 1.783. With the market trading comfortably above the 200 SMA and a bullish alignment of the 20 EMA over the 50 EMA in place since the beginning of August, it looks like there is nothing that could stop the precious metal´s bullish wave. Short-term pullbacks could be seen as an opportunity to buy gold at a cheaper price. A bearish scenario is hard to imagine as long as the 1.550 support level remains intact with a weekly closing.
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