Gold Futures Advance on Outlook for U.S. Rates

Gold Futures Advance on Outlook for U.S. Rates, Europe Inflation

Gold futures rose for the second straight day amid forecasts that U.S. borrowing costs will hold at a record low and European inflation will pick up gradually.

Expectations that interest rates won’t rise until mid-2015 are appropriate, William Dudley, the president of the Federal Reserve Bank of New York, said today. European Central Bank President Mario Draghi said that the inflation rate will gain in the next 30 months, damping deflation risks. Yesterday, gold climbed after U.S. service industries expanded in February at the slowest pace in four years.

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California $10m gold coin cache spurs rush of theories

19th century gold coins found in California

One of the 19th century gold coins found in California. Photograph: Kagin’s Inc /AFP /Getty Images

Word last week that a Northern California couple found $10 million in gold coins while walking their dog has set off a Gold Rush of theories over who left behind all that loot.

“Scores of people” have apparently contacted the San Francisco Chronicle to offer their theories – or claim the money as their own.

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Key driver of gold

Key driver of gold in 2014: physical demand

Demand for physical gold out of China and other emerging markets has become the key driver of bullion prices, according to HSBC, as the rampant outflows from exchange traded funds (ETF) seen last year begin to stabilize.

“Investment demand, which had fueled the rally for over a decade, is no longer driving gold prices,” James Steel analyst at HSBC wrote in a report on Tuesday.

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China Biggest Driver of Gold Prices

China Now Biggest Driver of Gold Prices, HSBC Says

China’s buying of gold jewelry, coins and bars is now the biggest driver of prices, not investment demand from the West, according to HSBC Global Research.

“We would argue that physical demand trends in the emerging world will largely define gold’s price movements this year,” HSBC analysts James Steel and Howard Wen said in a research note.

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