Gold hits a four-and-one-half month high

Shocking move by the Swiss National Bank sent the dollar reeling

Bullion metals ended sharply higher on Thursday, 15 January 2015 at Comex. Safe-haven demand was in full force among traders and investors on Thursday, in the wake of surprising news the Swiss National Bank abruptly abandoned the Swiss franc's peg to the Euro currency. Gold futures pushed solidly higher and hit a four-and-one-half month high on that news. Shocking move by the Swiss National Bank sent the dollar reeling.

Gold for February delivery surged $30.30, or 2.5%, to settle at $1,264.80 an ounce.

March silver rose 11 cents, or 0.7%, to $17.10 an ounce.

In mid-morning European trading hours, Switzerland's central bank scrapped its long-standing floor against the euro, which sent the Swiss franc soaring against the euro and the dollar. The central bank also cut its interest rate on sight deposits to a negative 0.75%. When the dollar falls, gold prices tend to push higher.

The SNB news was big and unexpected, and sent shudders throughout many currency, stock and financial markets. The Swiss franc rallied strongly against the Euroby more than 20% on the news. The SNB implemented the peg to the Euro in 2011 in an effort to stem the appreciation of the franc. Thursday's SNB news has added still more anxiety to an already very nervous market place.

While gold prices rallied sharply on the SNB news, so did U.S. Treasuries. The move by the Swiss central bank came in part due to ideas the European Central Bank will soon initiate quantitative easing of its monetary policy. A European court ruled Wednesday that the ECB could use a quantitative easing move in its monetary policy. The ECB meets to discuss monetary policy on January 22.

Also an underlying bullish factor for gold and the precious metals are growing ideas the U.S. Federal Reserve may be forced to hold off on raising interest ratespossibly until 2016. The plunge in crude oil prices and deflation concerns are the main worries that could prevent the Fed from making a rate hike, which many had expected to occur in mid-2015.

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