On Wednesday gold prices extended gains on renewed investors’ optimism. Market player are expecting new monetary stimulus from the European Central Bank and further quantitative easing by the US Federal Reserve.
During Asian trading hours gold futures for delivery in June rose by 0.1% adding $2.10 to trade at $1,474.20 per ounce.
Yesterday the yellow metal closed on the upside for a seventh time in nine sessions. The commodity climbed up by 0.3% gaining $4.70 per ounce. Gold gains were triggered by prospects that the US Federal Reserve will keep putting $85 billion asset purchases per month. Later this Wednesday the central bank will announce its asset buying program. Analyst and investors believe that is very likely to stay unchanged. However, recent economic data show positive economic developments.
Usually, when the economic power weakens gold gains back its safe haven appeal. However, in April we saw a huge sell off from fleeing investors. The market crash was provoked by many gold price forecast cuts from big money managers. Additionally, exchange-traded gold products decline also brought fear on the market. In respect this led to a $200+ slump in gold prices. The yellow metal registered its worst performance in 16 months.
Tomorrow analyst and investors will focus their attention on the European Central Bank. The bank was previously expected to trim its key interest rate from the current level of 0.75%. Though, disappointing data from the Euro region cut out these expectations.
- Read more here: Market analysts seem positive on gold8217;s upward direction
A Chinese holiday is likely to soften the physical demand for gold bullion. The celebration in China ends this Thursday. Yet, the demand in the Asian region is still strong. The biggest worldwide gold consumer – India is also celebration this month. Akshaya Tritiya festival takes place in May and boost gold-buying. Till early June the wedding season in India will also underpin gold demand. India alone accounts for a quarter of global gold consumption. India’s population currently accounts to at 1.21bn, up 18% from decade ago. More than half of the global gold consumption goes the India and China.
