Gold being the solid hedge investment is currently trading at $925.00 and ounce, you could attribute that price to the ongoing problems in the financial markets, an unstable, fluctuating (bear market looming) stock market – which include the earning downgrades from both Google and yahoo, the recent huge writedowns ($4 billion) from investment bank UBS. You could also throw in for good measure the massive problems unwinding in the bond insurance sector with FGIC losing it’s AAA credit rating, and MBIA about too disclose possible massive writedowns on CDO (collartized debt obligations) insurance.
Plus, inflation is high in the global economy – despite some countries such as New Zealand and Australia increasing interest rates, even some Asian countries such as the Philippines. Inflation may become runaway, with food (wheat) and oil becoming scarce commodities. If by some point the world suffers a huge deflationary recession, I am curious how much oil and wheat and even gold will be effected.
In the mean time, it was suggested that Gold could still correct (substantial % drop) early or mid year, this hasn’t materialized – yet. Despite the Fed cutting rates in a short period of time by 125 points, there have been no real serious rallies on Wall Street and investors were still reluctant to dump gold to go back into the stock market.
This is what I currently see, unfortunately I cannot cut and past my trading platform graph onto wordpress. So, gold is currently trading over the 5 day average, sitting at $923.00, at this point a support line is draw from that price. The 20, 2 Bollinger band shows gold sitting just under the upper band. The 50 day average is showing support at $868.00.
Locked in option at $930 against the USD.
At this point in time Gold does not look overbought on a 1 day trading platform.
*please note morbius glass does not give investment advice. The following information is for reference only. Trade at your own risk.