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Gold Falls Back below $800 Towards Support at $780

Commodities / Gold & Silver Sep 10, 2008 - 08:32 AM GMT

By: Mark_OByrne

Commodities Gold's sell off continued yesterday and despite mounting concerns about the health of the U.S. financial system, gold has fallen to 11 month lows. After closing below recent support at $780, gold continued to fall in afterhours electronic trading before a slight recovery in Asian and early European trading.


Oil and the dollar have not moved significantly in either direction and thus gold is searching for direction and may take direction from moves in equity markets and from the continuing strong physical demand internationally.

Oil has remained flat despite OPEC production cuts and continuing concerns regarding Hurricane Ike's potential impact on oil and gas production in the Gulf of Mexico. Wholesale gasoline along the Gulf Coast jumped 12 percent yesterday, the biggest increase in almost three years, as Hurricane Ike approached the region responsible for 48 percent of U.S. refining capacity.

The dollar remains extremely overbought especially given the unfolding debacle on Wall Street, the epicenter of the U.S. financial system. Fannie Mae, Freddie Mac and Lehman Brothers and Washington Mutual's nationalisation and solvency issues are very bearish for U.S. bonds and the U.S. dollar.

Despite this, sentiment towards the precious metals on Wall Street and in the media is very bearish right now. There is simplistic reporting and constant references to how gold has fallen 25% from its ‘peak' and failure to point out however that gold remains up by more than 18% since the start of the credit crisis – unlike the vast majority of asset classes. This is likely a good contrarian indicator that we are near to a low in this recent correction. However, for those with short term horizons we have constantly cautioned about the risk of “catching a falling knife”. Markets tend to ‘trend' in any given direction for longer than participants expect. Those with long term horizons should take this opportunity to buy gold bullion with both hands.

Today's Data and Influence
The main economic releases of note today are UK trade balance figures at 09:30 GMT and a Eurozone growth forecast update, due out at 10:45 GMT.

Gold and Silver
Gold is trading at $774.00/774.70 per ounce (1200 GMT).
Silver is trading at $11.25/11.29 per ounce (1200 GMT).

PGMs
Platinum is trading at $1204/1213 per ounce (1200 GMT).
Palladium is trading at $226/232 per ounce (1200 GMT).

By Mark O'Byrne, Executive Director

Gold Investments
63 Fitzwilliam Square
Dublin 2
Ireland
Ph +353 1 6325010
Fax  +353 1 6619664
Email info@gold.ie
Web www.gold.ie
Gold and Silver Investments Limited
No. 1 Cornhill
London,
EC3V 3ND
United Kingdom
Ph +44 (0) 207 0604653
Fax +44 (0) 207 8770708
Email info@www.goldassets.co.uk
Web www.goldassets.co.uk

Gold and Silver Investments Ltd. have been awarded the MoneyMate and Investor Magazine Financial Analyst of 2006.

Mission Statement
Gold and Silver Investments Limited hope to inform our clientele of important financial and economic developments and thus help our clientele and prospective clientele understand our rapidly changing global economy and the implications for their livelihoods and wealth.
We focus on the medium and long term global macroeconomic trends and how they pertain to the precious metal markets and our clienteles savings, investments and livelihoods. We emphasise prudence, safety and security as they are of paramount importance in the preservation of wealth.

Financial Regulation: Gold & Silver Investments Limited trading as Gold Investments is regulated by the Financial Regulator as a multi-agency intermediary. Our Financial Regulator Reference Number is 39656. Gold Investments is registered in the Companies Registration Office under Company number 377252 . Registered for VAT under number 6397252A . Codes of Conduct are imposed by the Financial Regulator and can be accessed at www.financialregulator.ie or from the Financial Regulator at PO Box 9138, College Green, Dublin 2, Ireland. Property, Commodities and Precious Metals are not regulated by the Financial Regulator

Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. Past experience is not necessarily a guide to future performance.

All the opinions expressed herein are solely those of Gold & Silver Investments Limited and not those of the Perth Mint. They do not reflect the views of the Perth Mint and the Perth Mint accepts no legal liability or responsibility for any claims made or opinions expressed herein.

Mark O'Byrne Archive

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