Gold is rising in anticipation of Fed meeting

The price of gold rose in anticipation of meeting the U.S. Federal Reserve, to be held later this month and after that, as representatives of EU finance ministers have given Spain one more year to meet their financial goals.

The Federal Reserve will hold a two-day meeting on 31 July, which is expected to leave interest rates unchanged and may declare to hold another round of quantitative easing. Three of the top politicians of the Federal Reserve on Monday laid the foundation for the third round of bond purchases, saying that the recovery in the U.S. remains weak and unemployment is too high.

Recall that after the first round of bond purchases in late 2008, gold has more than doubled in price.

Recently, there is a tendency of transition from gold to back the dollar, which is caused by high risk. In this regard, the gold loses its status of an asset-seekers. Lack of a clear trend in the U.S. economy, where interest rates are the key factor for the price of gold also scares off potential investors.

The correlation between gold and the dollar index has reached the most negative performance over the past 20 months. This means that these two assets are more likely to move back to each other, as happened in early July. The last time such a negative correlation between the traced at the beginning of December 2010.

We also learned that the gold reserves in the exchange of products fell by the largest amount in one day since the end of May, reflecting the wariness of some investors in bullion.

August gold futures on the COMEX today declined to  2.5$ and now stands at 1586.6 dollars per ounce.