Why the Gold Price Is Up Today - Topping $1,300 an Ounce

Spot gold in afternoon trading tore through the $1,300 an ounce level to $1,313.40, gaining $34.90, or 2.73%. The gold price was solidly higher Thursday, buoyed by the U.S. Federal Reserve's dovish sentiment, a weaker dollar, and safe-haven demand.

Gold price

Commodity market analyst Jim Wyckoff told Kitco, "In gold, we're seeing technical buying... we're also seeing some safe-haven demand from geopolitical tensions, mainly Iraq. Right now, the gold market is embarking upon a price uptrend and the bulls do have momentum on their side."

Silver prices are also up 9% from last week's lows.

Gold ended Wednesday's session nearly flat at $1,272.40 as June's FOMC meeting held few surprises. As market participants digested the Fed's statement overnight, however, and weighed its impact on precious metals, gold prices caught a bid.

The Fed changed its interest rate outlook slightly. While the central bank suggested a more aggressive pace of interest rate increases starting next year, it lowered projections for the long-run target interest rate.

In short, interest rates are not going to rise anytime soon. And even when they do, they will still sit at low levels.

That sent the dollar slipping to its lowest level in nearly four weeks, which helped send gold up today.

The Fed also confirmed at the end of its meeting on Wednesday that it will ease monetary conditions by buying $35 billion a month through the end of July, when the FOMC meets again. For the first time, the amount the Fed is committed to purchasing is lower than when it first implemented its third round of quantitative easing, or QE3.

But, between the Fed and the Bank of Japan, officials are still buying $100 billion of assets a month. Furthermore, there is a good chance the European Central Bank (ECB) could engage in a major asset-buying plan. It's the only real option left after cutting interest rates to record lows earlier this month, with the rate of overnight deposits below zero.

ECB President Mario Draghi maintains the central bank isn't done trying to goose the limping Eurozone economy.

While global government stimulus programs might be effective short term, it's the weaning off of such measures that's troublesome.

"Asset purchases may act like a sweet poison for the governments," Bundesbank President Jens Weidmann said last week about his opposition to the ECB's proposed bond purchase program. "The rude awakening may come when the purchases are reduced or stopped altogether."

That's a worry shared by many economists as the U.S. central bank's generous bond buying is set to end this fall. Savvy gold traders aren't waiting to feel the full impact.

Gold traders also aren't waiting for ongoing international situations to grow worse. The yellow metal, valued as a safe-haven asset, is benefiting from grave geopolitical tensions overseas.

The civil war in Iraq continues, prompting some sharp risk aversion among traders and investors. Reports confirm violence in Iraq is still flaring and that ISIS rebels have taken partial control over Iraq's largest oil refinery. Worries are growing the violence could spread to other Arab nations.

Additionally, tensions between Russia and Ukraine are still simmering. Just this week, Russia cut off natural gas supplies to Ukraine. Russia said it will only supply natural gas to the struggling country if it's paid for in advance.

Today's Top Investor News: Ukraine and Iraq prove that geopolitical factors are the quintessential wild cards when it comes to estimating energy prices - and the oil "crisis spike" is just getting started. Our expert breaks down recent events and forecasts where oil prices are headed in coming months...

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