Gold rallies on Bank of England's QE expansion and a weak dollar

GOLD prices were drifting sideways throughout most of the week, as a "blue" wave failed to materialise early on in the US elections and hopes of a large fiscal stimulus faded. Gold finally rallied towards the end of the week to a high of US$1,950, when the Bank of England (BOE) expanded its quantitative easing (QE) by £50 billion (S$88.6 billion) more than the expected £100 billion. The dollar continues to decline against major currencies, providing some relief for gold prices.

Investors returned to riskier assets on prospects of a divided Congress in the aftermath of the US election. A rally in global stock markets had been pressuring gold prices and the dollar in a rare occurrence. There were also expectations that the recently concluded Federal Open Market Committee meeting might throw in some monetary stimulus in the face of a lack of action from US politicians. However, the Federal Reserve kept its loose monetary policy intact but pledged again to do whatever it can in coming months to sustain a US economic recovery.

Technical analysis for Comex December Gold Futures (GCZ20)