Gold Shakes Off Profit Takers

Gold climbed to $996 an ounce before settling back to $995 an ounce less than an hour before Fridays New York open.

Having successfully shaken out earlier profit takers, investors could be forgiven for thinking gold is on course to break through to over $1000 an ounce by today’s close.

We always advise caution when a stock or commodity has made significant gains in the short period of a week, as many speculators are reluctant to hold a profitable position over the weekend when markets are closed but while politicians are still active.

Gold has garnered much of its Friday morning strength in Europe as a result of the appalling economic news emanating from Euroland and the UK. This may account for the accepted correlation of the price of gold moving in the opposite direction to the US dollar ‘falling out of bed’.

When the US markets open and if the dollar stays strong, the gold/dollar correlation may come back into play.

If so, it suggests that speculators would be further encouraged to take profits off the table before the close.

We would not argue with those brave enough to be tempted to top up their gold holdings if a dip of $10 an ounce or more in the spot price occurs by the end of trading today.

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