Investing.com – Last week saw gold futures climb to fresh record highs on four consecutive days, before edging lower after a margin increase by the CME Group on gold futures prompted some investors to sell their positions and lock in gains.
On the Comex division of the New York Mercantile Exchange, gold futures for October delivery settled at USD1,747.65 a troy ounce by close of trade on Friday, jumping 3.9% over the week, its sixth consecutive weekly gain.
Gold futures rose to a record high of USD1,815.65 a troy ounce on Thursday, eclipsing the previous day’s high of USD1,780.85 a troy ounce.
Gold prices soared on Monday, as market sentiment was rattled after ratings agency Standard and Poor's downgraded the U.S. sovereign debt rating by one notch to AA+ from AAA after markets closed last Friday.
The ratings agency kept the rating outlook at negative, suggesting a further downgrade could be possible within the next 12 to 18 months.
The downgrade prompted investors to shun riskier assets, such as stocks and high yielding currencies, and flock to traditional safe haven assets like the yen, Swiss franc and gold.
Gold extended gains on Tuesday after the Federal Reserve pledged to keep its benchmark interest rate at an all-time low until “at least through mid-2013.”
The Fed also indicated that it “discussed the range of policy tools available to promote a strong economic outlook recovery in a context of price stability” and said it was prepared to employ the tools “as appropriate”.
The statement fueled speculation the central bank may embark on a third round of quantitative easing, after the second round of bond purchases concluded at the end of June.
Minutes of the Fed’s meeting will be published on August 30 and will provide more insight into the policy debate, while Fed Chief Ben Bernanke is to speak at the central bank’s annual policy retreat in Jackson Hole, Wyoming on August 26.
On Wednesday, risk appetite crumbled as fears grew that the euro zone’s debt crisis could spill over to the region’s banking sector, while speculation over a French sovereign debt downgrade raised concerns over the health of major French lenders, particularly Societe Generale.
Gold prices rallied above the psychologically-important USD1,800-an-ounce-level on Thursday, before retreating after the CME Group, operator of the Comex raised the amount of cash that traders must deposit for speculative positions by 22%, it announced Thursday.
The CME increased the so-called initial margin to USD7,425 per contract from USD6,075 per contract, pushing small investors out of the gold market as it raises the cost to trade a futures contract.
The margin for hedging will also increase 22% to USD5,500 per contract from USD4,500.
Earlier in the week, a number of Wall Street investment banks raised their average gold price forecast for the remainder of the year, with JP Morgan projecting the precious metal to hit USD2,500 by the end of 2011.
Elsewhere on the Comex, silver for September delivery traded at USD39.11 a troy ounce by close of trade on Friday, adding 0.58% over the week, while copper for September delivery slumped 1.35% on the week to trade at USD4.002 a pound.
Looking ahead to the coming week, U.S. data on consumer price inflation will be a major focus of attention, while Tuesday’s meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy will also be in focus.
On the Comex division of the New York Mercantile Exchange, gold futures for October delivery settled at USD1,747.65 a troy ounce by close of trade on Friday, jumping 3.9% over the week, its sixth consecutive weekly gain.
Gold futures rose to a record high of USD1,815.65 a troy ounce on Thursday, eclipsing the previous day’s high of USD1,780.85 a troy ounce.
Gold prices soared on Monday, as market sentiment was rattled after ratings agency Standard and Poor's downgraded the U.S. sovereign debt rating by one notch to AA+ from AAA after markets closed last Friday.
The ratings agency kept the rating outlook at negative, suggesting a further downgrade could be possible within the next 12 to 18 months.
The downgrade prompted investors to shun riskier assets, such as stocks and high yielding currencies, and flock to traditional safe haven assets like the yen, Swiss franc and gold.
Gold extended gains on Tuesday after the Federal Reserve pledged to keep its benchmark interest rate at an all-time low until “at least through mid-2013.”
The Fed also indicated that it “discussed the range of policy tools available to promote a strong economic outlook recovery in a context of price stability” and said it was prepared to employ the tools “as appropriate”.
The statement fueled speculation the central bank may embark on a third round of quantitative easing, after the second round of bond purchases concluded at the end of June.
Minutes of the Fed’s meeting will be published on August 30 and will provide more insight into the policy debate, while Fed Chief Ben Bernanke is to speak at the central bank’s annual policy retreat in Jackson Hole, Wyoming on August 26.
On Wednesday, risk appetite crumbled as fears grew that the euro zone’s debt crisis could spill over to the region’s banking sector, while speculation over a French sovereign debt downgrade raised concerns over the health of major French lenders, particularly Societe Generale.
Gold prices rallied above the psychologically-important USD1,800-an-ounce-level on Thursday, before retreating after the CME Group, operator of the Comex raised the amount of cash that traders must deposit for speculative positions by 22%, it announced Thursday.
The CME increased the so-called initial margin to USD7,425 per contract from USD6,075 per contract, pushing small investors out of the gold market as it raises the cost to trade a futures contract.
The margin for hedging will also increase 22% to USD5,500 per contract from USD4,500.
Earlier in the week, a number of Wall Street investment banks raised their average gold price forecast for the remainder of the year, with JP Morgan projecting the precious metal to hit USD2,500 by the end of 2011.
Elsewhere on the Comex, silver for September delivery traded at USD39.11 a troy ounce by close of trade on Friday, adding 0.58% over the week, while copper for September delivery slumped 1.35% on the week to trade at USD4.002 a pound.
Looking ahead to the coming week, U.S. data on consumer price inflation will be a major focus of attention, while Tuesday’s meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy will also be in focus.