Gold prices in 2011 bounced back to a high again
After a gold prices dropped from records high in the previous sessions, now gold prices in 2011 bounced back to a high again on Wednesday. This came about following the announcement by the Federal Reserve that the rates of interest would hang around zero for no less than two years and as fears over the euro zone and US debt tarried.
Gold Prices in 2011 at $1,778.29/ounce
This precious metal was at less than the unsurpassed optimum of $1,778.29 per ounce that it struck on Tuesday. The price remained high even as equities tried to recover from the weighty losses that they had incurred earlier on in the week. On early Wednesday, the price of an ounce of sport gold was up by 0.6%, going at $1,754.54.
This week, gold prices in 2011 had recovered by nearly six percent. Following the Friday relegation of the U.S credit rating, the simmering uncertainties over the economic outlook of the U. S and the euro zone debt have made battered assets seem as a high risk venture.
David Jollie, an analyst from Mitsui Precious Metals, said that it is quite hard not to be optimistic in an environment where a metal holds 3 or 4 reasons why its price will be higher. He went on to say that the move might seem a little bit overstretched but in a market where people are concerned about risk, gold had strongly gained from its status of refuge.
On Tuesday, the Fed pledged to keep the interest rates close to zero for another two years. It also stated that there would be considerations towards taking further steps that will help promote growth. These comments will affect gold prices 2011 negatively as well as positively. On the brighter side, this boosted equity taking the heat off gold as a substitute to the higher risk assets.
On Wednesday, the world shares pulled through despite the fact that European stocks recuperated from a low of two years. Although links between the dollar and gold has destabilized in the past few years, this news will greatly weigh on the dollar, making it a positive for gold.
On Tuesday, the Global ETF holdings fell by 7.2 tons (the first decline in thirteen sessions) as was computed by Reuters. On Tuesday, the NY SPDR Gold Trust (world’s largest gold-backed ETF) announced its major one day outflow since January 25 of slightly above thirteen tons.
The iShares Silver Trust also showed a large outflow earlier on this week. On Monday, the company’s holdings had dropped by almost 120 tops. This was the most the holdings had dropped in one day since mid of June. On Tuesday, the outflow was still unchanged. The ratio of silver to gold prices reached a record level in that particular session since February, as gold climbed when silver was embroiled in an extensive trading of commodities.
The highest level of the ratio of silver prices to gold prices was hit since early February in that sitting, as silver was involved in wider commodity selling as gold prices 2011 escalated. Currently, it is almost at 46, (from a hit of 31 in April) which is an up from the twenty-eight year low.
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