Ben Bernanke’s Jackson Hole speech has generally been interpreted to mean another round of quantitative easing (QE3) aka ‘printing money’ is coming. This would devalue the dollar, and given the inverse relationship between gold prices and currency prices, QE3 means higher gold prices.
The release of the Fed minutes showed that further quantitative easing — a possible QE3, will likely occur if the economy does not improve. Since the economy doesn’t look like it is improving, traders took this as an indication of likely additional easing, and creating incentives to get into gold ETFs.
While the gold market whipsaws from day to day thanks to speculation, the festival season is beginning in India. Festival season runs from August to November and coincides in part with monsoon season, the severity of which can have a significant impact on gold consumption in India, the world’s largest gold buyer.
Gold spot prices have multiplied over the decade, leaping from $250 per ounce to over $1600 per ounce today, having peaked in late summer 2011 at over $1900 per ounce. But gold mining ETFs and stocks have not performed as well.