Gold Only 10% Above 200 Day Moving Average
Commodities / Gold and Silver 2010 Sep 28, 2010 - 07:56 AM GMTGold rose slightly yesterday as the dollar fluctuated and US stocks suffered small losses but has fallen 0.3% today. Gold was a whisker away from the $1,300/oz level on the spot market yesterday with some very determined sellers at this level. Those holding large short positions may be determined to defend this level in order to protect against further losses. Tentative speculative longs may take profits.
Gold is currently trading at $1,290.43/oz, €959/oz, £814.82/oz.
The growing risk of competitive currency devaluations (something we wrote about last year) and what has been termed a global 'currency war' (by Brazil's Finance Minister overnight) has markets on edge and currency markets have been particularly volatile. The growing realisation that ultra loose monetary policies and "beggar thy neighbor" monetary policies may debase currencies is leading to continuing safe haven demand for gold. Gold is the only currency that cannot be debased and its value is not dependent on the performance of politicians and central bankers. Problems with the periphery economies in the eurozone are not abating and appear to be spreading as seen in the crisis in Belgium. With questions about the future of the European Monetary Union being asked, gold should be well supported, especially in the euro.
Gold - 1 Year (Daily) and 200 Day Moving Average (Green).
Many participants and much media commentary is expecting a correction here and this may come. However, the market is not particularly overvalued after its very gradual rise in recent weeks (up 3.5% so far in September). Gold is only some 10% above its 200 day moving average. Previous corrections in the last year (see chart above) have come about after gold had risen by between 10% and as much as 20%. Indeed in the last 5 years (see chart below), gold has risen as much as between 19.7% and 26.4% above the 200 DMA on different occasions. This suggests that gold could go higher prior to correcting.
Gold - 5 Year (Daily) and 200 Day Moving Average (Green).
There was speculation at the LBMA conference in Berlin that pension funds who have very small allocations to gold (and many have no allocations to gold) are beginning to diversify into gold due to its lack of correlation with equities and bonds. This trend looks set to continue and is significant as pension fund assets are very large versus the small market that is gold. The entire global gold supply is worth less than $200bn a year while the largest 300 pension funds collectively hold about $6 trillion in assets. Therefore, even a small allocation of 3% to 5% to gold would contribute to higher prices; especially as the supply from central banks is set to go into reverse with central banks becoming net buyers again in 2010.
Silver
Silver is currently trading at $21.18/oz, €15.74/oz and £13.37/oz.
Platinum Group Metals
Platinum is trading at $1,610/oz, palladium is at $545/oz and rhodium is at $2,300/oz.
This update can be found on the GoldCore blog here.
Mark O'Byrne
Director
IRL |
UK |
IRL +353 (0)1 632 5010 |
WINNERS MoneyMate and Investor Magazine Financial Analysts 2006
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: Past experience is not necessarily a guide to future performance. 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. GoldCore Limited, trading as GoldCore is a Multi-Agency Intermediary regulated by the Irish Financial Regulator.
GoldCore is committed to complying with the requirements of the Data Protection Act. This means that in the provision of our services, appropriate personal information is processed and kept securely. It also means that we will never sell your details to a third party. The information you provide will remain confidential and may be used for the provision of related services. Such information may be disclosed in confidence to agents or service providers, regulatory bodies and group companies. You have the right to ask for a copy of certain information held by us in our records in return for payment of a small fee. You also have the right to require us to correct any inaccuracies in your information. The details you are being asked to supply may be used to provide you with information about other products and services either from GoldCore or other group companies or to provide services which any member of the group has arranged for you with a third party. If you do not wish to receive such contact, please write to the Marketing Manager GoldCore, 63 Fitzwilliam Square, Dublin 2 marking the envelope 'data protection'
GoldCore Archive |
© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.