It was a very volatile week for gold last week, with the price of reacting to the resurgence of the US Dollar and a weakening global oil price.
Oil is set for its biggest weekly decline in 10 months on speculation that the Organization of Petroleum Exporting Countries (OPEC) may agree at a meeting in Abu Dhabi next week to raise global production. The price of oil has come back from a record high of $100/barrel and is currently below $90/barrel.
End of month profit taking in gold is also making itself felt with an immediate dampening effect on the price. There is also speculation that a lot of hedge funds are getting in early for year end profit taking. Many funds have to show a physical return on their initial investment in order to satisfy their customers and so some may be taking profit early in order to beat the rush.
Overall the outlook is still bullish, with many of the price dips resulting in renewed buying as many investors still see gold as a safe haven investment. Lower prices for the jewellery sector (where 70% of gold is used) mean that customers are enjoying lower prices in the busiest season of the year (the Indian wedding season and Christmas) and therefore will stimulate demand into the new year.
Many analysts still feel comfortable in the long term outlook for bullion due to strengthened buying during the dips, uncertainty in the US and global economy (subprime being on everybody’s lips at the moment) and continued high demand for oil and petroleum (despite the temporary respite in prices).
Gold expos to be held in Saudi Arabia
