Gold News

Gold dips but looking strong after Friday's $20 surge

Gold drifted lower in Asia today despite a rise in gold futures traded in Tokyo.

After Friday's sudden leap above $627, gold stood $2 lower per ounce as the European session drew near.

"There are some investors taking profits after Friday's big gain," said a Japanese gold analyst to Bloomberg.

"But trade will be thin because of a market holiday in the United States." (Wall Street is closed today for Martin Luther King Day.)

The Sterling price of gold dipped below £320. Versus the Euro, gold pulled back €1 from its 7-week high above €485 per ounce.

Gold continues to look very strong against the Euro on a technical basis. Last Thursday it broke the downtrend starting Nov.10 as interest-rate news caused mayhem in the currency markets.

The Bank of England raised Sterling rates to 5.25% but the ECB kept Eurozone rates at 3.5%. The Euro tumbled to a 29-month low versus the Pound below £0.66.

The ECB also said it would not use "strong vigilance" in tackling inflation. So with Eurozone money supply rising 9.3% year-on-year – and more Euro notes in circulation than US Dollars – French and German investors may be glad to hold a little gold today.

Technical analysts also say the Dollar price of gold looks set to rise further.

Analysts at Scotia Mocatta report that "gold easily broke through [its] 200-day moving average trading [on Friday] as high as 627.75...On the downside expect buying from the 200-day moving average down to 615.00 as the old resistance level now provides support."

"For now as long as gold stays above the $610-$611 area," says Investec Australia in its daily report, "we expect prices to keep testing the top of the band around $628, with a target of $636 should it break."

"We saw some improvement in demand last week at lower levels from physical buyers. This proved particularly significant in holding prices above the psychologically important $600 level, despite a large easing in oil prices."

But what of the fundamentals supporting the current bull market in gold? For a full report by Ned Schmidt of the Value View Gold Report, click here and read on...

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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