Gold prices spiked late Tuesday and early Wednesday morning following the re-election of President Barack Obama as many economists say that Federal Reserve policy will likely continue on a possible course to inflation.
“The outcome of the U.S. election increases the probability that the ultra-expansionary monetary and fiscal policy will continue, which puts pressure on the U.S. dollar and gives buoyancy to commodity prices,” Eugen Weinberg, head of commodities research at Commerzbank said in a report.
Gold jumped to around $1,729 an ounce, its highest level since Oct. 23. U.S. gold projections for December are up $3.70 to $1,718.70 an ounce. Gold prices are up a total of about $54 — 3.2 percent — since the beginning of this week.
As the left/right political paradigm continues to stymie a Republican House and Democratic Senate in coming weeks while lawmakers face tough fiscal decisions, gridlock could drive gold prices to historic highs.
Gold prices more than doubled during the President’s first term in the Oval Office. Some predictions show the precious metal reaching $1,800 per ounce by the end of the year and nearing $2,000 during the first half of 2013.