Gold failed to hold $1,000 last night after the US dollar found support from the Federal Reserves ‘Beige book’ which reports on the relative strength of regional US economies.
In the report the Federal Reserve surveyed businesses throughout the United States, and according the Fed, the survey provides evidence that the US recession is ending and their domestic economy is growing again.
However economists remain cautious, as the ‘Beige Book’ does not contain precise quantifiable data, additionally subsequent evaluation describe the growth as ‘fragile’ identifying rising unemployment and a lack of sustained consumer spending as a risk to the economic turnaround.
The report temporarily dampened gold futures trading, as the dollar began to recover from its continued weakness; gold traded as low as $983 overnight. The dollar rebound was short lived however as the ICE Futures US Dollar Index returned to previous levels in turn pushing gold back above $990.
Analysts have identified the return of the traditional Gold/Dollar inverse relationship as the predominant factor in the most recent gold rally.
