Is Gold Making a Comeback?

The price of gold rallied in during last week. Moreover, on a monthly scale gold is up by 3.7%. The recent disappointing non-farm payroll report may have lowered the odds of the FOMC tapering further its asset purchase program in the near future. Will gold continue to rally in the near future? Let’s analyze the recent news that may affect gold (GLD).

Despite the recent rise in gold price, the demand for leading precious metals’ ETF including iShares Gold Trust (IAU) and SPDR Gold (GLD) continued to diminish. During January, SPDR Gold’s holdings declined by 1%. The minutes of the December FOMC meeting revealed the reservations of FOMC members in further tapering QE3. Let’s take a closer look at this subject.

The FOMC and gold

Back in December, the FOMC reduced its asset purchase program by $10 billion. This mini-taper seems to have had an immediate effect on the markets including gold price and long term securities – two assets that are considered safe haven investments.

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