Gold is still going strong - with the price topping out at USD$739 on Friday.
It came back a touch on profit-taking towards the end of trading - but is still over the $730 mark.
The general expectation is for a period of profit-taking* and consolidation in the short term but overall the expectation is for higher prices in the future.
"On the charts gold has moved back into overbought territory and may benefit from a period of consolidation.
"However, the absence of any significant resistance levels means that gold is in uncharted territory and making its own history," James Moore at TheBulliondesk.com said.
The NZD is on the up again sitting around the 0.74 mark for the last few days. It is in a similar position to gold, where it’s a little overbought at the moment and we are currently waiting to see which way it is likely to move, but given the strengthening carry trades, it could be either direction yet. If it drops expect to see quite strong price increases in gold in NZD, as the current exchange rate position is helping to take the edge of the higher gold prices.
Current gold price drivers:
• US economy: ask anyone and they’ll have some information or an anecdote about the US economy, and where it’s heading. It’s not looking so hot at the moment, but it’s definitely not the only factor in the gold price at the moment.
• Flight from risk: There is a large movement away from high risk high return investments - towards more safe-haven investing, and protection against uncertain geo-political risk
• End of the Central bank sales for this year: Total gold sold this year - between 441 and 460 tonnes. With the ECB sales finished the price suppression pressures will ease.
• Performance: from http://www.marketoracle.co.uk/Article2209.html
Gold is one of the top performing assets of recent years and has risen 16% so far in 2007 and is on course for its seventh straight annual gain.
So far this quarter gold has rallied 13.6% in USD, from $648 to $736 USD.
So far this quarter gold has rallied 13.2% in GBP, from £323 GBP to £365.50 GBP.
So far this quarter gold has rallied 9.4% in EUR, from €479 EUR to €524 EUR.
• Oil – Oil is currently sitting at inflation adjusted highs, with supply unable to keep pace with demand. Gold is used to hedge against high oil prices.
All in all things are looking very good for a bright and shiny future (sorry about the pun) for Gold as a good safe-haven investment.
NEWS: 2007 American Eagle gold coin sales suspended
* Profit-taking = Where investors sell to take a quick profit (or liquidity) on the high, which drops the price, which then leads to more people investing with the lower price (hence the saw tooth look to the gold price on a daily basis).
