Gold is getting its groove back and it's taking the rest of the commodities along with it. The precious yellow metal rose 4.1% last week to $1,732.20 an ounce; the highest close since December 7.
The bulk of this latest burst of energy in commodity prices directly coincided with the Federal Reserve's policy statement last Wednesday. While much of the Fed's details were similar to the previous release, they dropped a bombshell by extending the outlook for near zero interest rates through late 2014. The extension of the "free money" deadline caused a feeding frenzy in all asset classes, a sure sign money on the sidelines was coming back into riskier assets.
"You can tell by the way the markets traded that people were caught off guard," says Rich Ilczyszyn, trader and founder of iiTrader.com about the Fed's statement. "This to me gives the green light for gold specifically, and a lot of commodities."
But not all commodities are created equal. Weather, geopolitical tension, political influences and particularly currency fluctuations can wreak havoc on all commodities, some more than others.
For example, while Ilczyszyn is bullish on gold right now, he doesn't think its poor sister silver will go along for the ride higher.Read More »from Bernanke Gives the Green Light to Buy Gold! Says Trader