Gold prices are desperately waiting for bullish news from the Federal Reserve this week after slipping from last week's gains.
Last week, gold woke up from its sleepy August and increased 3.5%. It saw its greatest one-week jump since January and gold exchange-traded funds (ETFs) followed in its footsteps by reaching four-month highs and breaking 200-day moving averages.
These jumps came in response to the Federal Open Market Committee (FOMC) meeting minutes that suggested the need for more stimulus and some sort of quantitative easing. The report release extended the recent precious metals rally initiated by European Central Bank President Mario Draghi, who pledged his commitment to keep the Eurozone in place.
Gold prices on Monday fell from last week's high of $1,674.28 to $1,671.80, and have continued that decline this week. The most actively traded contract for December delivery was down Thursday morning by $1.10, or 0.1%, to $1,661.90 per ounce.
So what happened to dampen last week's enthusiasm for gold?
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Europe, China Pound Gold Prices
News from abroad knocked down some of the gold price optimism.
Germany's Ifo Institute announced Monday that its business sentiment declined for a fourth consecutive month in August to 102.3; this came in lower than the 102.6 estimates and July's revised 103.2 figure.
August's number represented its lowest point since March 2010 and may be a signal that Germany's domestic firms are becoming more vulnerable to the Eurozone debt crisis.
Carsten Brzeski of ING said to Reuters, "The downward slide continues as German companies are increasingly becoming pessimistic about the future. It looks as if the German economy will, at best, be treading water in the coming months. The latest batch of sentiment indicators even points to a contraction in the third quarter."
Not helping matters on Monday was news/or lack thereof from China's central bank.
Phil Streible, senior commodities broker at RJO Futures said to TheStreet, "Traders were a little bit disappointed in China not implementing any [quantitative easing] over the weekend."
Now gold investors turn to the United States for clues on the metals market.
Gold Investors Waiting for Bernanke
U.S. Federal Reserve Chairman Ben Bernanke will address the Jackson Hole Symposium Friday morning, which will be his chance to give an indication of the central bank's next move for the U.S. economy.
Gold investors are cautiously optimistic as Bernanke in previous years has stated his monetary easing intentions at the Fed's annual Jackson Hole symposium.
Carlos Perez-Santalla, trader at PVM Futures said to CNBC, "There certainly seems to be a premium in advance of the potential hint, but the downside is limited as whether Bernanke gives an indication of their intentions or not. Most economists agree the economic measures in the U.S. point to a need for some action soon."
With expectations running high for QE3 thanks to the slow recovery for the U.S. economy, Bernanke's speech has taken on greater importance this year than others.
Bullish participants are impatiently waiting for some sort of action, although Bernanke could wait until the upcoming FOMC meeting Sept. 12-13 to deliver a more detailed answer.
Don't worry, if Bernanke doesn't say anything on Friday, market watchers can look ahead to next week for remarks from Europe. The European Central Bank could announce its minutes for the first time in more than a month.
Gold traders are optimistic that German Chancellor Angela Merkel's aid promises to Greece, along with ECB President Mario Draghi's word to do what needs to be done to keep the Eurozone intact, could produce ECB easing in September's first week.
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