SPOT PRICES for buying gold fell back to $1720 an ounce Wednesday morning in London, after hitting two-week highs following news of the re-election of Barack Obama as US president.
“Gold is making significant gains on the back of a weak US Dollar,” said this morning’s commodities note from Commerzbank.
Prices for buying silver fell back below $32 an ounce after they touched their highest level in a week.
“Obama’s re-election is likely to boost expectations of continued easing by the Fed,” says Junya Tanase, chief currency strategist at JPMorgan Chase in Tokyo.
“We forecast gold will end the year at $1780 an ounce and peak late in 2013 at around $1890 an ounce,” adds a report from ANZ.
“We think there could be upside risks to these forecast highs, in the event of additional US policy easing or signs of inflation following the liquidity injections of the past four years.”
“Monetary policy will remain loose under Obama,” reckons Michiyoshi Kato, senior vice president of foreign-currency sales at Mizuho Corporate Bank in Tokyo.
“The Dollar will be sold…[but] Dollar selling may not last that long as the US faces the fiscal cliff.”
The so-called fiscal cliff refers to the combination of tax cut expiries and spending cuts currently due at the start of 2013 unless Congress passes legislation to cancel or postpone them.
European stock markets meantime ticked lower this morning, while on the currency markets the US Dollar recovered from earlier losses as the Euro dropped to a two-month low against the Dollar.
