The gold price rose Sunday night, gaining $5.00 to $1,362.85. The gold price climbed alongside S&P 500 stock futures ahead of a widely-anticipated, news-filled week. On Tuesday, the Republicans are expected to re-take the House of Representatives in the mid-term elections with the Senate likely to remain under Democratic control. While the currency and stock markets – as well as gold – may have priced in the outcome of the election, there is much more debate as to how the markets will react to the announcement on Wednesday from the Federal Open Market Committee (FOMC) meeting at the conclusion of its two-day meeting.
While Chairman Bernanke and the FOMC are expected to announce a new quantitative easing (QE) initiative, the size and scope of QE 2.0 is uncertain. The gold price has risen over $200 from its late July low as investors appear to have priced in, at minimum, a $500 billion money printing campaign from the Fed. Anything less could cause gold, as well as stocks and commodities, to shed a portion of their recent gains.
Finally, Friday brings the monthly unemployment report from the Labor Department – with the consensus expecting non-farm payrolls to rise by 60,000. With Bernanke and the Fed focusing so heavily on the stubbornly high unemployment rate, a weak number has the potential to send the gold price to a new record high above $1,387 per ounce. Stronger payroll gains could cause to the Fed to ease the aggressiveness of its deflation-fighting campaign – a fact that could cause gold to fall and the U.S. dollar to rally.
source http://www.goldalert.com/?p=5817
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