Last week marked another weekly decline for the gold price. Fact of note is that the yellow metal posted a new record high at $1920.50.
Sentiment remained bullish earlier in the week, but later hints of further central bank sales raised concerns among traders. On Thursday, the news that Libya had sold around 29 tonnes of gold, this added to woes as the potential margin hikes on Comex futures also contributed to the tense price action.
Investors and traders are very exposed to gold now, because sentiment remained bullish for a long time due to ongoing concerns about the global economy. However, the technical charts are not so positive any longer. There is no real direction provided by the markets. This may be considered as a sign that people are interested in taking profits at these levels.
Looking ahead, the Euro zone debt debacle and speculation on further US monetary easing should help keep gold underpinned, with many analysts predicting a rise to $2000 by the end of October. “Weaker developed market growth and the enhanced risk of debt – induced deflation in the United States and Europe materially enhanced the appeal of gold as a safe haven asset,” said Morgan Stanley in a note.
The gold:silver ratio has steadied around 44 in recent weeks, after plummeting to a low of 31 in April when both gold and silver rose to record highs, this highlights gold‘s outperformance of silver since April.
Trends researcher Gerald Celente explains why gold is not in a bubble in his point of view.
