The price of gold moved back to thre week highs yesterday, nearer $1300 an ounce as the roller coaster ride for bullion continues off the back of a falling US dollar which was triggered by the US Fed Bernanke comments surrounding America’s QE program.
Latest Gold Price
Spot gold climbed as much as 2.7 percent to $1298.36, its highest since June 24. It was up 1.7 percent to $1285.16 an ounce by 14:07 GMT on Thursday. Traders said that gold prices could target a break through technical resistance at $1300.
“I suspect a test of $ 1300 will be on the cards, considering order books are very light up to that point … I am looking to fade a rally into $1300 to $1310, with a stop in at $1315 and a take profit at $1285.” according to MKS Capital senior trader Alex Thorndike.
Gold’s Roller Coaster Ride
Gold prices hit a high of $1920 an ounce in September 2011 and since then prices have dropped 33 percent. In the second quarter alone, gold corrected 23 percent, the biggest quarterly correction in a generation.
The yellow metal is now on track for its biggest weekly gain in nearly two years on easing fears of an early end to US monetary stimulus that has boosted bullion’s appeal as a hedge against inflation. Gold prices have gained about 5 percent so far this week, on course for its biggest weekly climb since October 2011 when it rose 6.2 percent.
The Fed’s Ben Bernanke has not retreated from monetary tightening. The Fed is still on track to start tapering bond purchases as soon as September. The plunge in the US dollar since Ben Bernanke made his confused comments on Wednesday night and the $40 surge in the price of gold are just part of the roller coaster ride that can make or break traders and short term investors.
Paper v Physical Gold Prices
Sooner or later there will be a disconnect between the paper gold price and the physical gold price and the price of physical gold will then go through the roof. If you have physical gold hold on to it. In the long run it will be worth many times what it is worth now.
Gold is always golden. The Bernanke says he will stop printing, but these are just words to try to calm markets and to reign in gold prices. If Bernanke were to stop printing US dollars then he would be screwed because the American economy is not ready for it, despite what he says to talk it up, and it would not surprise me at all if gold continued to rise once people realise.
If the Bernanke does continue printing, and our guess is that the word continue is wrong because it cannot stop, then people will definitely turn to buying physical gold. And if you have been watching gold you will know that the prices for physical gold (eg: gold bullion or coins) have not really dropped, rather, it has been purposely suppressed to protect the US dollar, and once the pressure is removed then gold prices will bounce up like a rocket.
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Gold price jumps back to $1300 as bullion’s roller coaster ride continues
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