Philly Fed survey boosts gold

The gold price has bounced back in some fashion over the last 24 hours, hurtling back above $1,550 and now probing the $1,600 mark. Silver is also on a tear and is back trading around $28.50. One swallow doesn’t make a summer, however, and given the continuing eurozone tensions – which now include confirmation that the European Union is working on an emergency plan to handle a Greek exit from the euro – these gains could be lost on a short-term basis if we see another bout of US dollar buying.

Precious metals were helped higher by news from the Federal Reserve Bank of Philadelphia, confirming that US business activity is slowing again. The bank’s Business Outlook Survey registered negative readings for the first time since September last year. Coupled with the biggest drop in the Bloomberg Consumer Comfort Index in 14 months and its little surprise that pessimism is growing – which means spikes in gold and silver prices as expectations grow that the Fed will again be firing up its printing press.

Over in Europe, German Chancellor Angela Merkel is also said to be “open” to new suggestions about stimulus plans for Greece, and has stated yet again that she has “the determination to keep Greece in the eurozone.” All of this of course increases the likelihood of the ECB engaging in efforts to cheapen the euro. Meanwhile across the Channel in the UK, Bank of England policymaker Adam Posen has suggested that the BoE’s latest £125 billion quantitative easing splurge may not be “enough”, and that further QE may be needed because the UK economy remains weaker than he expected.

The gold bears won’t be laughing for much longer.

Author: The GoldMoney News Desk

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