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Is Gold correcting? (update 4)

Posted by Adrian on May 5, 2008

Still at this point there does not appear to be a substantial correction in the gold price, apart from the general volatility in the markets, gold is holding it’s own between $800 and $900 an ounce. With the USD rising somewhat and a slight calm to the markets, after the central banks have flooded the finance sector with liquidity. But as we are all aware the liquidity is designed to prop up an ailing banking system, which in turn is actually tightening liquidity. There is also delevraging in the private sector and the credit crunch is far from over, as it will move into motor vehicle/credit card and student loans. Not to forget the US housing depression hasn’t reached bottom with rising defaults still occurring.

The stock market has had some rallies, with Asian stock markets returning to higher levels again. But, this is on speculation and mostly driven by institutional investors in a volatile trading market. So the commodity market is going reflect degrees of that volatility.

I see support of gold at 835 and it’s currently looking very oversold under the 100 and 50 day averages. although I would say that the selling off (relevantly cautious sell off) of gold – is not dramatic. It would indicate that gold (and most commodities) are still seen as solid investment in volatile markets.

Depending on central bank policies, both from Europe and the US in regards to the USD. If it’s decided that the European central bank will buy a load of US dollars, in an effort to stabilize the declining US dollar we may see gold lose some more value. But Europe is caught flux of declining markets and inflation, a central bank that doesn’t know whether it should cut rates or increase them. In the meantime gold will continue it’s climb back into the 900 range. This may exasperate faster in the coming months if a bigger US mortgage bank needs to be bailed out, or a German bank is in trouble. Whatever the case gold is performing well in the crazy markets.

Summary: Gold currently at 860, support 836, resistance 909. May trade back in to the 900 range.

Is Gold correcting ? Hits $1000.00! (update 3)

Is Gold correcting? Soon $1000.00 and ounce (update 2)


3 Responses to “Is Gold correcting? (update 4)”

  1. […] Comments (RSS) « Is Gold correcting? (update 4) […]

  2. […] the morbius glass post Is Gold correcting (update 4) support was set at 836, now set at 844 with resistance now at 902. There appears to be trading […]

  3. Nyctalopia said

    Somehow i missed the point. Probably lost in translation 🙂 Anyway … nice blog to visit.

    cheers, Nyctalopia.

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