Gold prices surged to their highest level in more than a month Wednesday as the precious metal's fourth straight daily gain took it to what some analysts see as a launching pad for topping $1,900.
The day's gain left gold near its Sept. 22 closing price of $1,739.40 and marked this week as a potential turning point.
We met resistance today at the 50 percent retracement of the Sept. 6 high to the Sept. 26 low and have backed off that $1,726 level, which happens to correspond to the top of the daily Ichimoku cloud, said Tim Green, managing director of IBTrade. A close significantly above the $1,726 on consecutive days this week could signal gold is ready to test the August highs above $1,900.
The day's 1.7 percent surge came as the euro tumbled against the dollar and stocks on both sides of the Atlantic were mixed. In late afternoon trading, the Dow Jones Industrial Average was up nearly one percent, the S&P 500 added 0.61 percent and the Nasdaq Composite was 0.8 percent higher.
The day's gains stemmed from multiple causes:
- A big drop by the euro against the dollar
- Short covering ahead of options expiration.
- Heavy physical demand from Asia
- A strong rise in global holdings of gold in exchange-traded products.
- Deadlocked negotiations on restructuring Greek debt during a Brussels summit that was supposed to have unveiled solutions rather than divisions among leaders
Gold for December delivery rose $23.10 to $1,723.50, while spot gold gained $24.70 to $1,723.28.
Silver for December delivery climbed 26 cents to $33.31, while spot silver added 16 cents to $33.27.