If you pick up our mid-week bulletin, you may recall that earlier this week we reported that gold had dipped to a four-week low after a seemingly endless bull run. We said that this was a golden opportunity to take advantage of the window to invest and expected that a number of international events on the horizon could easily push prices back up.
As we noted in our mid-week briefing, the European Central Bank had its policy meeting this week, where policy makers were widely expected to announce rate cuts. Rick Reider, the chief investment officer of the world’s leading asset management firm, BlackRock echoed these sentiments saying that central banks around the world would need to begin aggressive price cuts, putting gold firmly in desirable asset class strategy.
Now, although it would be fitting to confirm that we did have a crystal ball today, Friday the 13th, we actually don’t! We were totally right about the European Central Bank though – it took tougher than expected action on policy easing to cut rates, with a 0.1% drop taking rates overall to minus 0.5%. Policy makers also announced a three-year record quantitative easing program.
When the news emerged on Thursday morning, gold prices as expected rallied, clawing back some of the earlier drop. However, it’s not bad news if you didn’t heed our advice to buy earlier in the week as things settled down a little later in the day. Gold is still holding strong over the psychological $1500 barrier at $1506.60 at end of day yesterday – meaning you still have time to cash in and buy right now before other predicted geopolitical events kick in and send gold spiralling once again.