Precious gold resumed its rise on Wednesday trading as expected further monetary stimulus by central banks enhanced demand on the metal as an inflation hedge.
Fed Chairman Ben Bernanke comments on Monday suggested there is no rush to withdraw stimulus, where he referred that he is not satisfied with the current unemployment rate of 7.8% which indicates the Fed is likely to continue with its monetary easing polices to support the vulnerable labor market.
Meanwhile, there worries of the U.S. debt ceiling as U.S. Treasury Secretary Timothy Geithner warned that the Congress has to increase the debt-ceiling before early March, otherwise this could “impose severe economic hardship” on the United States.
The worries in markets in addition to comments from Japan's Economy Minister Akira Amari helped the yen to rebound for a second day against majors. Yesterday, Amari mentioned than more than desired devaluations in the yen may impact imports and households, yet further monetary easing is still expected by the BOJ in their coming meeting on January 21-22.
It is worthwhile to mention that gold's appeal increases at times central banks are easing their monetary stance, noting that the yellow metal recorded its 12th consecutive yearly rise in 2012 on central bank's stimuli and gained 70% as the Fed bought $2.3 trillion of debt in two rounds from December 2008 through June 2011.
Gold rose for a third day to trade around $1684.09 an ounce, after opening at $1679.39, as the breach of tough resistance at $1670.40, which represents SMA 50 level on the weekly charts, paved the way for the advance. The trading range for today is expected among the key support at $1625.00 and key resistance now at $1695.00.
On the other hand, the dollar soared for a second day after hitting its lowest level 1-1/2-week low against a basket of major currencies this week, as indicated by the Dollar Index which touched a high of 79.78 while it currently hovering around 79.76. Crude oil for February's delivery inched up to trade around $93.45 a barrel from the day's opening of $93.41.
Among other precious metals, sliver ticked down to $31.33 from the day's opening of $31.37, platinum skyrocketed to 3-month high around $1681.25 from $1668.48, and palladium soared to $712.95 from $706.50.
Platinum continued its rally today on supply concerns after Anglo American Platinum, the world's biggest producer of the metal, said it may sell or shut its Union mine.