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New Gold Price Chart: Fed Minutes and Middle East Solidify Gold Above $1,320

This is a syndicated repost published with the permission of Money Morning. To view original, click here. Opinions herein are not those of the Wall Street Examiner or Lee Adler. Reposting does not imply endorsement. The information presented is for educational or entertainment purposes and is not individual investment advice.

Gold prices today (Wednesday) finished back over $1,320 an ounce after the release of the latest U.S. Federal Reserve minutes, and amidst turmoil in the Middle East. Our new gold price chart reflects the current June-July rally.

gold price chart

Gold prices have rallied with a 9.5% gain this year through the close of yesterday’s session and are on track to tack on more gains today.

U.S. gold futures for August delivery reached $1,324.50 an ounce as of midday for an $8 (+0.61%) rise, putting gold futures on track for the biggest gain in nearly three weeks. Gold spot price per ounce was up $5.30 (+0.4%) at $1,323.90 an ounce.

On Tuesday, SPDR Gold Trust (NYSE Arca: GLD) – the world’s largest gold exchange-traded fund (ETF) – reported its second consecutive session of inflows, according to Reuters. It’s the first time since mid-April GLD’s holdings reached above 800 tonnes.

Here’s the top market news that’s affecting gold prices right now…

Top Stories Affecting Gold Prices Right Now

The Federal Open Market Committee (FOMC) meeting minutes were released this afternoon at 2 p.m. EDT. They followed the FOMC meeting last month in which Fed Chairwoman Janet Yellen was dovish on interest rate talks.

The market had a muted reaction to the minutes today because they were not unexpected. According to Kitco,August gold was $8.40 higher to $1,324.90 an ounce as of 2:16 p.m. EDT, compared to $1,324.70 two minutes ahead of the minutes’ release.

Per Yellen’s previous comments, the Fed will likely end its monthly bond-buying program in October. There were no new insights on when the Fed might raise interest rates.

“It was in line with expectations. There were no surprises, really,” Citi Institutional Client Group’s futures specialist Sterling Smith said to Kitco.

Interest rates are important for goldbugs because higher interest rates are bad news for gold prices. Gold prices will typically weaken when rates go up as investors seek out higher-yielding assets.

Geopolitical tension in the Middle East is the other major factor contributing to gold’s recent gains. Here’s how it’s shaping the yellow metal right now…

Geopolitical tension in the Middle East and in Ukraine is pushing gold prices higher. The safe-haven investment tends to enjoy gains when fear is in the air.

Israel has launched a military offensive in the Gaza strip this week. It declared its purpose is to bring Palestinian rocket attacks to an end. The escalation in violence between Israel and Gaza militants has become the worst since November 2012.

“Some investors are buying gold as the Middle East region is very tense,” R.J. O’Brien & Associates senior commodity broker Phil Streible said in a telephone interview with Bloomberg. “We have been seeing an increase in the safe-haven premium since the violence in Ukraine started.”

With gold prices solidified above $1,320 an ounce, is it the right time to invest in gold?

Time to Buy Gold?

Money Morning Chief Investment Strategist Keith Fitz-Gerald said in May that the case for owning gold has never been stronger.

Here’s why now is the time to make sure the yellow metal plays a part in your portfolio…

“Many investors are asking themselves if now is the time to buy gold. I think that’s the wrong question,” Fitz-Gerald said. “What they should be asking themselves is if they can afford not to buy gold.”

Fitz-Gerald highlighted the fact that central banks are trillions of dollars in the hole, so they are buying gold as a means of supporting their currencies. According to the World Gold Council (WGC), in 2013 net purchases totaled 369 tonnes. That represents 12 consecutive quarters in which the central bankers have reported net inflows.

And recent gold news corroborates Fitz-Gerald’s bottom line…

You see, Fitz-Gerald also stressed that consumers in India and China – who jointly represent three out of every five people alive today – generally believe that gold is going to increase in price over time. Yet few actually own it, according to the WGC and U.S. Global Investors.

“As the economic development in these two countries continues at a rapid pace, overall demand will increase, even if it falls off in developed countries like the United States and in the European Union,” Fitz-Gerald said. “Already the statistics are proving this point. Consumer demand in China rose 32% in 2013 to a record 1,066 tonnes, while in India, demand rose 13% to 975 tonnes.”

Indeed, last month we reported that demand out of India and China are expected to send gold prices soaring in the second half of 2014.

Barron’s agrees.

“We expect the weak physical demand seen in Asia of late to pick up again in the second half of the year, which should result in a rising gold price, especially since the headwind from ETF investors is likely to further abate,” analysts Barbara Lambrecht and Michaela Kuhl said to Barron’s in June. “We are confident that gold demand in India will pick up noticeably as compared with the first half year and last year once the import restrictions have been eased. China is also likely to demand more gold again in the coming months.”

As Asian demand picks up, look for our gold price chart to continue its upward swing in this latter half of 2014.

Money Morning recently delivered for our Members a two-part “cheat sheet” that outlines the right amount of gold for your portfolio. You can get that gold investing guide – for free – here.

The post New Gold Price Chart: Fed Minutes and Middle East Solidify Gold Above $1,320 appeared first on Money Morning

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