Metals Price Watch: Gold Price Gains on Fed Stimulus Hopes
iNVEZZ.com, Wednesday, July 3: The gold price advanced on Wednesday, boosted by comments on stimulus by Fed officials and a drop in Asian shares caused by weak Chinese data. Bullion appears to have started to recover from last week’s plunge to $1,180.71 an ounce, the lowest price level in nearly three years. However, analysts are not convinced that gold had hit a bottom, with some suggesting that another slump could take the price below $1,000 an ounce.
The copper price rose to its highest level in two weeks on the London Metal Exchange. Aluminium, nickel, zinc, lead and tin all fell.
**Gold and silver**
Two Fed officials commented separately yesterday on the need to maintain debt purchases. According to them, the US central bank’s monetary policy to support the economy through asset purchases will likely be warranted for some time to come. Bullion suffered a blow last week after Fed Chairman Ben Bernanke said that the US economy was recovering strongly enough for the central bank to begin tapering bond purchases. These purchases, known as quantitative easing, have been supporting the gold price in recent years. Bernanke’s comments led to the biggest quarterly fall in the gold price on record and although this week has brought some relief, analysts believe that a further decline may be coming.
“I am not convinced this is the bottom,” commodity investor Jim Rogers said at an event in Singapore, as quoted by Reuters. “Where that bottom will be I have no idea. Perhaps it will be $900-$1,000.”
The gold price was at $1,255 an ounce as of 15:37 GMT. At the same time the silver price was at $19.74, up about two percent on the day.
!m[Copper Hits Two-Week High](/uploads/story/3645/thumbs/pic1_inline.jpg)
The copper price reached $6,993.50 a metric ton on Wednesday on the LME, the highest level since June 19, before retreating later in the day to $6,920. It closed at $6,915 on Tuesday.
The rise was prompted by supply worries that led traders to close short positions. Recent signs of improvement in the US economy have also helped copper, which some traders see rebounding above $7,000 a ton before the end of the year.
Copper was the only base metal to advance on the LME on Wednesday. The aluminium was at $1,817 a ton from $1,832 at Tuesday’s close; the lead price fell to $2,070 from $2,079.5; the nickel price declined to $13,865 from $14,040 a ton. Zinc and tin also fell.