After Hitting 6 Month High, Gold Rally Takes A Pause
September 20, 2012 3:54 AM EST
After hitting a six-month high of $1,779.10 per ounce Wednesday in early European session trading, and in spite of a series of news early in the day suggesting the precious metal was in for a rally, gold prices traded flat around $1,770.
The action in the pits of New York and Chicago continued a trend seen the prior day -- where gold moved against news developments -- as traders in specie are still seemingly trying to feel their way as to what the appropriate price of bullion should be following unprecedented monetary easing by the world's central banks.
For gold prices, "much will depend on how QE3 plays out in the fixed income markets and how it impact EUR-USD," James Steel, an analyst at British bank HSBC wrote in a note to clients.
But interestingly, gold did not seem to be responding to a rallying euro, a recovery in platinum prices -- which tracks gold and other precious metals -- or the announcement by the Bank of Japan overnight that it would be engaging in yet another round of monetary easing to match the one being undertaken by the Federal Reserve.
Gold was also trading out of sync with the stock in various international miners, such as Kinross Gold Corporation (NYSE:KGC), Yamana Gold Inc. (NYSE:AUY), Barrick Gold Corporation (NYSE:ABX), El Dorado Gold Corp (NYSE:EGO) and IAMGOLD Corporation (NYSE:IAG), all of which rose more than 1 percent on high volume and little news.
Still, strategists saw the gold rally continuing in the long run.
"I think other central banks will announce more accommodative policies and that should continue to support gold," Jeremy Friesen, a commodity strategist at French bank Societe Generale, told Reuters.
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