There could also be some adverse factors ahead which could bring it back down again sharply.
While gold breached the $1,300 level in overnight trading last night it is obviously way too early to call this the start of a consistent gold price uptrend. However for gold bulls it is obviously a very encouraging start to the year with the recent price boost initially stimulated by the Swiss National Bank’s decision to drop the Swiss Franc’s peg to the Euro.
The question now facing us is whether or not a sustained breakthrough can be achieved. At the time of writing the price had fallen back into the high $1,290s but was again testing the $1,300 level.
The European Central Bank (ECB) is widely anticipated to announce that it is to implement a Quantitative Easing (QE) programme and buy government bonds to try and help stabilise the Eurozone economy at its meeting tomorrow.
But apart from some kind of knee-jerk reaction when the decision to do so, or kick the can further down the road, is announced, we don’t see this having any serious price impact given many of these factors have already been taken into account in the recent gold price advance anyway. Either way the Eurozone continues to have significant problems.
Greek elections come up on January 25. Opinion poll figures suggest the outcome is probably still too close to call, but there is a real chance that the anti-austerity, and anti-EU Syriza party may well win – but whether it might win by a sufficient majority to hold power on its own is much more uncertain.
The latest opinion polls put Syriza as gaining more ground and now ahead by between 4 and 6.5%, but whether this lead is sufficient to give it an outright majority should it win – even with the extra 50 seats in parliament given to the winning party to help it form a government under the Greek system – is far less predictsble.
Some pundits put it just a few seats short of an outright majority should this be the case. While Greek public opinion appears to support many of Syriza’s proposals, particularly those in cutting back the current austerity programmes and reneging on the country’s debt, opinion also appears to favour remaining in the Eurozone and worries about that may prompt a last minute swing to the longer-established political groups and yet deliver victory to the incumbent New Democracy party and its allies.
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