Gold Tests Resistance as U.S. Dollar Remains Under Pressure

By: GoldCore

Gold is testing resistance levels as the dollar remains under pressure. It is currently trading at $955.70/oz and if it breaks through $960/oz and sustains it, the possibility of a correction in gold may not materialise. The continuing weak data coming out of the U.S may make investors less likely to take profits on gold and or continue to diversify into gold.

Disappointing jobs and retail sales did not faze Wall Street yesterday but higher oil prices and a lower dollar led to a firm bid to gold. With interest rates set to remain low for the foreseeable future gold’s lack of yield is not an issue and investors are again taking a shine to its long term inflation hedging potential. The recent central bank agreement to slow down official sales and continuing producer dehedging shows a changing sentiment towards gold in the important official sector which is encouraging the bulls. Falling South African production figures yesterday (gold production down 12.2% year-on-year) also underline the strong supply demand fundamentals driving the gold market.

Gold has its seasonal low and bottomed this week last year and it is quite possible that we are at are soon to be at the seasonal lows prior to surpassing the significant resistance at the psychological $1,000/oz mark.

The raft of economic measures including the unprecedented quantitative easing introduced in most major economies to combat recession may turn out to be built on sand and investors may increasingly look to the yellow metal as being a more solid investment to safeguard their wealth.

Silver
Silver has broken through $15.00/oz and is currently trading at $15.08/oz and looks very robust and primed to challenge the highs of March 2008 when it reached $21/oz. After $21/oz there is a possibility of silver going parabolic as it did in the late 1970’s which would see it challenge it’s record nominal high of $50/oz again. Official Chinese TV had a report on how silver bars were a good investment yesterday. Silver remains the most undervalued of all the asset classes and if only a tiny fraction of investment capital internationally enters the tiny silver market silver will again rise sharply in value.

Platinum Group Metals
Platinum has gained $8 this morning and is currently trading at $1,270/oz. Palladium has made up some ground and is in sight of $280/oz, currently trading at $277/oz. Rhodium is trading at $1,625/$1,725

Bullion Services Team

WINNERS MoneyMate and Investor Magazine Financial Analysts 2006

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