Gold and Silver Prices Rise As Dollar Hits 4-Mo. Low

September 12, 2012 /

Gold and silver prices rose moderately Tuesday as the dollar fell to a fresh four-month low ahead of the highly anticipated Federal Reserve meetings Thursday and Friday at which it’s expected to announce a third round of quantitative easing.

PowerShares DB US Dollar Index Bullish ( UUP ), measuring the dollar against a basket of global currencies, fell 0.70% to its lowest since the beginning of May. It has been in a downward spiral since breaking below key price support at its 200-day moving average in late August.

In the futures markets, gold rose 0.46% to $1,733 an ounce. SPDR Gold Shares ( GLD ) added 0.36%.
Market Vectors Gold Miners ETF ( GDX ) ticked up 0.25%.

If the Fed decides against enacting more stimulus this week, gold and silver could drop sharply. In that case, it will likely say, as it has in the past, that it stands ready to act should the need arise, which would be bullish for precious metals.

“This will ensure further currency debasement, which increases the attractiveness of holding gold as a way of diversifying foreign exchange holdings,” wrote David Morrison, market strategist at GFT.
“Central banks remain net buyers, and gold is increasingly used as collateral and as a medium of exchange. Turkey and Iran have both increased their gold imports, and the suspicion is that Turkey is using gold to pay for Iranian oil.”

Silver futures ticked up 0.33% to $33.55 an ounce. IShares Silver Trust ( SLV ) added 0.39%. Global X Silver Miners ETF ( SIL ) rose 0.66%. Both SLV and SIL are hanging near five-month highs.


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