Gold boosted more than it has in a year last week, based on a speculation that the Federal Reserve will maintain U.S. economic stimulus. This was a much needed rise for the precious metal, as it somewhat restored it as a valuable asset. With a rise of 1.3 percent, investors in the precious metal were pleased to see that their time and money was not wasted. With the 1.2 percent fall in home sales in June, it would seem that the federal stimulus program would be around for a while.
Over the past year, gold prices have dropped nearly 20 percent, losing $57 billion from the value of gold exchange-traded product holdings. That compounded with the disconcerting news of the Fed’s plan to slow the pace of the stimulus prompted many investors to lose faith in the metal.
As the Bloomberg Dollar Index reported the U.S. dollar has dropped to the lowest amount since June 20, speculators don’t foresee the Fed making any restrictive policies before 2016.
Hedge funds and other large speculators have increased their net-long position by 56 percent to 55,535 contracts by July 16, the most they have seen since June 4, according to the U.S. Commodity Features Trading Commission.
Silver futures jumped 5.4 percent to $20.509 per ounce for September, the highest prices they have seen since April 25, when they sat just above at $20.575 per ounce.
Source: Bloomberg