The long term trend of gold is up.  This has been discussed in a previous article on this site.  While the US economy and the US dollar are in a precarious state, gold offers a safe haven.  For those who doubt the relevance of gold, remember that for the past 6,000 years, paper currencies have come and gone, but gold represents the true store of financial value.

BIS, the Bank of International Settlements gives the same weight to gold as to deposits of cash for banks.  Gold is still regarded as a solid asset, unlike equities, derivatives and mortgages.

So we know that gold has a bright long term future, but how about the shorter term?  This article discusses the near term prospects for gold.

We recently saw a correction in the gold price.  This was a purely technical pull back.  If you check out the gold price graphed against the 200 day moving average of the gold price, pull backs tend to occur when the price exceeds the moving average by $200 per ounce.  This occurred recently, with gold prices falling from over $1000 per ounce to less than $900 per ounce.

In addition, the IMF will eventually sell some of its gold stockpile.  This will depress the price, but it will not happen immediately.

The good news is that gold has bounced straight back.  This points to underlying strength.  The short term direction is currently up, with gold prices having increased back to $937 per ounce as at today.

(No Ratings Yet)

 Loading ...

Tags: Commodities, Futures Trading, gold

This entry was posted on Thursday, April 10th, 2008 at 10:32 am and is filed under Market Commentary. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.