Gold notches two consecutive weeks of gains

TradingPub Admin | July 19, 2013

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Want some free trading education on news that impacts gold prices? A good lesson would be the two straight weeks of gains that the precious metal enjoyed in response to statements made by Federal Reserve Chairman Ben Bernanke about the future of quantitative easing.

August gold finished the week ending on July 19 up 1.1 percent, after settling at $1,292.20 an ounce on the Comex division of the New York Mercantile Exchange, according to Kitco News.

After the recent appreciation that the metal has experienced, many bulls are eagerly waiting to see if gold will be able to surpass $1,300 per ounce, which is noted as being an important level, the media outlet reports.

Bullish gold predictions
Going forward, some market experts have indicated their bullish predictions for gold, as the majority of analysts who participated in a recent Bloomberg poll stated that they expect the commodity to rise in price during the coming week.

While 15 of the participants taking part in the survey conducted by the media outlet expressed such expectations, another five indicated their lack of a preference in terms of the metal rising during the period, and another nine predicted that gold will fall in value.

One major factor that was cited as helping to provide support for gold prices was the testimony of Bernanke. He stated before the House Financial Services Committee on July 17 that QE could be sustained in the event that "financial conditions - which have tightened recently - were judged to be insufficiently accommodative to allow us to attain our mandated objectives."

One major financial services institution that indicated strong hopes that the business climate will justify the lowering of these bond purchases in the near future is BNP, according to Kitco News.

"While (economic) data has been mixed so far in July, we think the fiscal headwinds restraining growth will likely ease in (the third and fourth quarter), supporting tapering expectations and allowing scope for data to act as a more consistent source of support for the U.S. (dollar)," BNP stated, the media outlet reports. "Notably, the two July time-stamped data releases we have received this week (Philadelphia Fed on Thursday and Empire Fed on Monday) both surprised to the upside."

Gold bears
While some market experts indicated their hopes that the precious metal will rise in value in the coming weeks and months, others indicated that gold is due for further losses soon.

"I'm still a bear, maybe on the wrong side of the camp, but with the stock market possibly hitting another record and with any slight uptick in interest rates, we could be looking at gold going very quickly below $1,100," Frank McGhee, chief precious metals trader at Integrated Broking Services in Chicago, told Reuters. "This market is so unpredictably violent that it could roll off a couple of hundred dollars in just three sessions."

Burgeoning investor sentiment
He made this statement after gold has experienced robust price declines this year, falling into a bear market in April, having plunged 20 percent from its all-time high. Bloomberg reports that in 2013, gold has lost 23 percent through July 18. The market expert noted that the precious metal has experienced sharp drops as the sentiment surrounding the strength of the U.S. economy improves.

Reduced demand for "disaster insurance" has coincided with sharp depreciation in the metal, Bernanke told the Senate Banking Committee on July 18, according to the news source. "One reason gold prices are lower is people are less concerned about extreme outcomes, particularly negative outcomes, and therefore they feel less need for whatever protection gold affords."

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