Will Gold Hit the Skids?

August 4, 2008 | By | 1 Reply More

Last week platinum sank to a six month low. Today in European trading spot gold followed suit falling from $914 an ounce to $900 an ounce at 0830 ET.

The yellow metal staged a recovery to $904 an hour later but in the short term it is anybodies guess where it will go from here.

If gold hits the skids, the next stop will be the $850 level but, fingers crossed, resistance at $900 will continue to hold up.

Despite the threat of a hurricane in the Gulf of Mexico disrupting oil supplies, continued attacks in Nigeria on the oil pipe lines, and not much to cheer the dollar, both oil and gold are showing a lack of response.

Although our medium and long term outlook for both gold and silver remain bullish, there are strong signals that the weakness in the stock markets coupled with lower trading volumes as the holiday season gets into its stride are having their effect on commodities, both hard and soft.

Precious metal optimists may be relishing the thought of adding to their positions if the price of gold breaks down the $900 barrier.

More cautious souls may wish to pay more attention to the technical signals than the changeable and often contradictory fundamentals that have been evident in recent weeks.

As we write gold has made over a $2 an ounce leap to $906.66 in less than half an hour. We can only assume that some weak longs were shaken out earlier this morning and that attention has returned to the fundamentals that should be driving the price.

That gold is becoming more volatile as a growing number of short term speculators realize that there are profit opportunities as the price fluctuates between $900 and $950 on a weekly basis clouds the picture.

Our view is to hold on to our current positions both in our chosen ETFs (GLD & GDX), physical metal at 

Bullion Vaults, and our mining picks and only think about topping up if gold sinks to $850. Otherwise breaking $1000 an ounce before the end of the year should signal the start of another significant leg up and time to buy.

In the meantime in and out quickies as the price stays within the $900-950 band may be the way to go if you want some action.    

 

 

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Category: Review

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  1. I see gold breaking $1000 per troy sometime after the U.S. presidential elections but for it to remain in a holding pattern, as it has, prior to that and then perhaps sinking back down.

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