Out of the blue gold futures prices soared more than 3% overnight to a two month high in New York, and then kept rising in after hours trading.
The jump dragged silver prices higher as well, but not the prices of other metals, such as platinum or copper which are considered industrial metals these days.
Comex gold for August delivery jumped $US41.40, or 3.3%, to settle at $1,314.10 an ounce in New York, the highest settlement level since April 14. It rose further in late trading to trade around $US1,320.
That was a rise of 3.8% on the day. It was the biggest daily rise in eight months, and no one analyst could advance a believeable reason for the sudden surge.
Comex July silver added 87 cents, or 4.4%, to end at $US20.65 an ounce.
The news should boost the price of gold miners in Australia today such as Newcrest.
In contrast oil prices hardly moved and again closed above $US106 an ounce in New York.
And US share prices were weak after the late rally the day before on the back of the Fed meeting and statements from chair, Janet Yellen about future interest rates and inflation.
The Aussie dollar was trading around 94 US cents this morning and the share price futures market was down 10 points or so.
But it was the jump in gold that stood out – traders reckoned it was the decision by the US government to send 300 military advisers to Iraq, but situation in Iraq has failed to really send prices higher in recent days, despite a worsening in the situation.
The US dollar eased overnight, but not by enough to spark the strong rise in the price of gold.
Some analysts claimed it was a reassessment of the commentary from fed chair, Janet Yellen, specifically her remarks on inflation.
Yellen on Wednesday refused to shed light on when the central bank could hike interest rates, emphasising that there’s no “mechanical formula” for future increases. In fact she did say rates would be lower than expected in the long term because of the continuing weaknesses in the economy.
She also said that recent inflation data were “noisy,” dismissing some speculation that the Fed could tighten policy based on data showing higher inflation. But inflation has been trending higher in the past three months, without gold reacting.
Traders claim that low interest rates in the US will benefit gold, as they make alternative assets such as gold more attractive.
But that has been the case for much of this year and after an early rise, the price of gold has been weak, especially over the past two months.
