Forex Gold Traders Looking For Support around $1,700

Forex gold traders are looking for support for gold at around the $1,700 level. Hope remains that the world economy is rebounding and that the prospect for inflation may allow gold to climb higher before the end of the year. Many forex gold traders are watching $1,700 as a crucial level for gold support. If it should dip below that number, expect the precious metal to take a temporary trip down. Some analysts are placing the key resistance number now at $1,780 with support at $1,685.


This past week the Federal Reserve announced that interest rates would continue to hover near zero until at least the middle of 2015. This statement by the Fed was no surprise, and therefore had little effect on gold prices.


Gold investors should continue to watch the central banks in the U.S. and the EU. Central banks are printing more dollars and euros than at any point in history, said currency analyst Michael Hasenstab at Templeton Franklin. In addition, politicians are refusing to confront fiscal problems. This will inevitably lead to inflation pressure as more dollars and euros are printed. This excessive capital spreads globally, and it will create currency weakness. That weakness will send investors into commodities and inflate the prices of those commodities, including gold.


There’s some speculation that the Fed may ease up on the stimulus as economic numbers continue to improve. Some analysts are speculating that fewer buyers may purchase gold as an inflation hedge because of this news and send the gold price down. Those economic numbers, though, have been seriously questioned by many economists. Gold investors should look at the central bank numbers, watch for inflation and adjust their gold buying accordingly.


India, the world’s largest gold buyer, will start buying the yellow metal next month in preparation for the Diwali festival season. The Wall Street Journal is reporting that Indian gold buyers are increasing activity now. The Multi Commodity Exchange reported that December gold demand in India ticked up 0.16 percent to 30,894 rupees per 10 grams.

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Meanwhile, Bloomberg released numbers that show a healthy gain for gold. The price of gold has advanced for the 12th consecutive year. The October average is at $1,749, making it the third highest month in history. When gold prices dropped below the $1,700 level, analysts blamed that on investor fatigue as they fought to break through the $1,800 ceiling.

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