Dec. 11, 2012 (Allthingsforex.com) – As the Federal Open Market Committee starts its two-day meeting today, gold prices are fluctuating close to their high for the week on expectations that the Fed will increase the size of its quantitative easing program.
Reaching as high as $1.718.90 per ounce, gold futures for February delivery on the Comex in New York have pulled back to $1,714.90 per ounce. In London, gold for immediate delivery was range-bound around $1,713.55. For most recent quotes, see the latest gold prices or find out how you can invest in gold at BullionVault.
Despite of the recent retreat in gold prices, the unprecedented amount of monetary policy easing offered by the Fed and other major central banks around the world continues to fuel demand for gold. A Bloomberg News survey of 49 economists showed 48 of them forecasting that the Fed will expand its bond-buying program. Such decision could bring the Fed’s balance sheet to a record $4 trillion.
Holdings of exchange-traded products backed by gold rose to a new record level of 2,629.3 metric tons yesterday. According to a report issued by the U.S. Mint office, demand for gold coins is also gaining momentum with over 68,000 ounces of American Eagle coins sold last month, compared with 59,000 ounces in October.
Weaker U.S. dollar and “fiscal cliff” worries could also make the case for higher gold prices going forward. Better than expected ZEW economic sentiment index reading from Germany and a stronger demand at the Spanish bond auction this morning have put the greenback under pressure against the euro. Although negotiations between policy makers continue, there is still no agreement reached to avert the so-called “fiscal cliff” of over $600 billion in spending cuts and tax increases due to start automatically next month.