Gold overcomes August high after dovish Fed comments

The gold price managed at its second attempt yesterday evening to exceed its August high. This morning sees gold at a 3½-month high of $1,176 per troy ounce. Following Fed Governor Brainard's comments, Fed Governor Tarullo has also spoken out against a US Federal Reserve rate hike this year. 

The interest rate expectations reflected in the Fed Fund Futures have further declined in response and the US dollar has come under pressure, which is lending tailwind to gold. The technical picture has also brightened, which could spark speculative buying and cause the gold price to rise even further. 

"Furthermore, concerns about global economic development have increased in the wake of disappointing data from China and Germany. This, coupled with the fall in global stock markets, is driving up risk aversion, which is appearing to benefit gold as a safe haven", says Commerzbank. 

The gold price in euro terms reached a three-week high of €1,031 per troy ounce this morning. The other precious metals are also making gains in gold's slipstream. Silver is again trading above the $16 per troy ounce mark, though it is still priced somewhat below the 3½-month high it achieved a week ago.