Gold Bounces Back on Iran Fears and Weak Dollar

Following Iran’s announcement that it had inserted a domestically produced nuclear fuel rod into its atomic research reactor, gold and silver prices spiked significantly.

On Tuesday, gold prices reached $1,600 an ounce at the Comex division of the New York Mercantile Exchange, a ten week high. Silver also moved upward to a five month high as a continuing decline of the dollar inspired a commodity rally.

Adam Klopfenstein, a market strategist at Archer Financial Services Inc. in Chicago, told Bloomberg the “fear trade” is back because of events in Iran. “Also, we are seeing buying across commodities because of the weaker dollar,” he said.

“Iran’s nuclear plans have raised fears that it is getting desperate and will take some drastic step,” Gnanasekar Thiagarajan, a director at Commtrendz Risk Management Services Pvt., said in Mumbai. “More sanctions are expected from the US and other nations. This will have a positive impact on gold prices as ideally people would try to buy gold.”

The new year rise in precious metal also follows the most recent Federal Reserve announcement. The Fed indicated it will begin to publish policymakers’ projections for its benchmark interest rate on overnight loans.

“Accommodating monetary policies throughout the developed world cause a renewed migration to hard assets by individual investors and sovereign-wealth funds,” Byron Wien of Blackstone explained.

According to minutes from the last Federal Open Market Committee meeting, a significant number of Fed officials agree economic conditions warrant a further “easing” of monetary policy.

Stubborn interest rates at or near zero are bullish for the gold market.

Article written by Kurt Nimmo
Infowars.com
January 4, 2012

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