WHY GOLD PRICES ARE RISING,,,,,,,,,,,,,,,,,,,,,,,,,

GOLD SOARS AND WILL SOAR AGAIN "TOMMOROW"

wednesday 06-06-2012, 11.45pm

Today on Wednesday gold futures has surging to a four-week high of USD1,621.95 a troy ounce rose by 0.32%. It earlier rose by as much as 1.4% to trade at USD1,642.15 a troy ounce, the highest since May 7. Investors hung on to hopes for action by global central banks and other authorities to stimulate growth and boost the world economy, boosting the appeal of the precious metal.

There are more reasons of what we have seen, a simple cause and effect relationship leading gold to its peak. Today on Wednesday after the news came from that European Central Bank kept rates unchanged and pledged to extend some of its liquidity providing operations. Gold seems to move upside and roses to its one month high of usd 1642.15 a troy. To find an cause and effect relationship here is interesting.

As we know that Greece crisis as well as a half build spain one keep creating problems for ECB and other global banks. So at this point of time they have left with two options either decrease the interest rate or to give more liquidity providing operations. As discuss in meeting that they will wait for the results of election to have a look on the position of Greece in euro zone and other economic concerns then they will try to give their support. So as they said  European Central Bank kept rates unchanged and pledged to extend some of its liquidity providing operations.

Draghi also said that main refinancing operations will continue to be conducted for as long as necessary, extending the operations until the end of the January 15, 2013.

 Which clearly give an indication that if more money will come to market it will certainly affect the value of euro as a currency as well as it will bring more inflation in country. so as a smart investor people are not interested in investing in currency or in government bond or in fixed income low interest rates securities or equities as it seems to loss its value. And an ultimate option left with investor is gold.To see the chart  of gold price click here 

http://www.forexpros.com/commodities/gold-streaming-chart

Investors hung on to hopes for action by global central banks and other authorities to stimulate growth and boost the world economy, boosting the appeal of the precious metal. Gold prices have rallied on past monetary stimulus measures. Investors tend to have faith on  the yellow metal on fears that excess liquidity would put a damper on the value of paper currencies and spark inflation. The precious metal is widely considered a hedge against inflation and a store of value.

This is what we have seen today but tomorrow also we can see the same rally in gold prices-

 Because Gold traders were now shifting their attention to a Congressional testimony by Federal Reserve Chairman Ben Bernanke on Thursday about the state of the U.S. economy. Gold traders will be looking for clues as to the likelihood of a fresh round of monetary easing, which could potentially hurt the U.S. dollar and support gold. The Wall Street Journal, citing interviews and Fed speeches, reported late Tuesday that the U.S. central bank want to take new measures to stimulate growth in the world’s largest economy. QE has been a key driver in gold’s bull run, as I said earlier that if QE3 will be there means more money supply and dollar will certainly loss its value and it also bring more inflation. As it keeps interest rates and borrowing costs low, which makes gold more attractive compared with yield- or dividend-bearing assets such as bonds or stocks. So we can  see an upside move of gold tomorrow.