Gold prices Commodity Market as Investor Interest

Gold commodities market sentiment was helped by the euro, which rose broadly on Thursday, hitting one-month highs versus the dollar and the yen, after a Spanish bond auction produced lower average yields than previously. Spot gold was bid at $1,276.85 a troy ounce at 1119 GMT (7:19 a.m. EDT) compared with $1,265.65 an ounce at the close on Wednesday. Earlier on Thursday it hit a record $1,277.05 an ounce and many expect it will hit $1,300 very soon.



Quantitative easing is normally a process by which central banks attempt to pump money into the economy by buying bonds. Excess liquidity could lead to too much money chasing too few goods or services resulting in price pressures. One potential trigger could be the conclusion of a meeting of the U.S. Federal Reserve on September 21, when the central bank could announce further quantitative easing to stave off economic slowdown in the world's largest economy.

Investor interest can be seen in the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust (GLD.P), which said its holdings fell to 1,294.746 tonnes by September 15 from 1,298.698 tonnes on September 14. Spot platinum was bid at $1,608.00 an ounce from $1,604.50 at the close on Wednesday when it touched a four-month high of $1,619.50. Palladium was at $554.50 at $553.78. Positive macro data is also partly behind the run higher in industrial precious metals such as silver, platinum and palladium. Spot silver was bid at $20.74 an ounce from $20.49 late on Wednesday.

There's still no real confidence in the U.S. recovery. No one sees any real reason for gold prices to decrease, said Gwenael Chazal, head of Metal Trading. U.S. consumer prices for August due on Friday could also spark a rally, which could take gold to $1,300 an ounce.