This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Gold Prices Build on January's 11% Rally (Update 1)

NEW YORK ( TheStreet ) -- Gold prices climbed higher Wednesday along with the euro, building on their 11% January rally.

Gold for February delivery closed up $9.10 at $1,749.50 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,754 and as low as $1,735.40 an ounce while the spot price was adding $9, according to Kitco's gold index.

Silver prices rose 54 cents to close at $33.80 an ounce while the U.S. dollar index was down 0.48% at $78.90.

Gold prices were adding to their January gains Wednesday as the dollar fell against the euro. The Automatic Data Processing employment report showed that the private sector added just 170,000 jobs in January, which was less than expected, and revised December's whopping 325,000 private job gain down to 292,000. The lackluster reading underscored the Federal Reserve's commitment to keep rates low until the end of 2014. Extended low rates have been a catalyst for gold.

Based on Deutsche Bank's estimates, the Fed won't look to tighten monetary policy until the unemployment rate is at least 7.6% or lower. The firm, however, does think the rate could fall more quickly than expected which would force the Fed's hand.

"Over the past four months, the unemployment rate has declined 0.6%," said Deutsche Bank in a recent note. "This has only happened 7 times before, and over the ensuing 12 months the unemployment rate on average has fallen by another 0.8%." The firm says policy makers could be in for a big surprise.

Martin Murenbeeld, chief economist at Dundee Wealth, thinks the Fed will stick to its long term rate forecast as he sees no big strength in the U.S. economy. "I don't see restrictive monetary policy," he says also speculating the Fed would do another quantitative easing program, or QE.

"If there is an implosion in the banking sector in Europe, the Fed is going to put money into the system to make sure U.S. banks are secure." Murenbeeld also thinks the Fed might take additional steps to prop up the housing market especially if Washington follows suit.

Although the Fed has increased the M2 supply -- money in circulation plus savings, checking and travelers checks -- by $2 trillion since the start of 2008, the money hasn't really made it into circulation, resulting in weak inflation. Murenbeeld says however that asset prices have seen inflation and that gold is "agnostic in terms of where inflation is."
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AEM $26.69 -0.04%
AUY $2.08 0.48%
EGO $3.09 0.00%
KGC $1.93 0.00%
AAPL $118.03 -0.71%


Chart of I:DJI
DOW 17,813.39 +1.20 0.01%
S&P 500 2,088.87 -0.27 -0.01%
NASDAQ 5,116.1430 +13.3350 0.26%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs