Gold Drops As Dollar Rises
Bloomberg reported the fall of gold due to speculation that the Federal Reserve may ease stimulus measures, while the strenghtening of the dollar thrawted investment int he metal.
Bloomberg reported the fall of gold due to speculation that the Federal Reserve may ease stimulus measures, while the strenghtening of the dollar thrawted investment int he metal.
Changes to the European Financial Stability Facility could mean a loss in value of the Euro currency in relation to gold and other precious metals.
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The strengthening of the dollar and rumors of China tightening monetary policy has pushed gold prices down. Some see this as a beginning of a correction for a ‘bubble’ in the gold market, yet many analysts see a continuing positive climate for gold.
Some analysts have pointed out that gold has few end users and a healthy above-ground supply, so why has it shown so much price strength in the last few years?
Gold prices traditionally rally off the summer lows in September as many players come back to the market. And if this year holds true to that seasonality, next month might turn out to be “a good September.”
Sprott Asset Management's chief investment strategist, John Embry, told Mineweb’s Gold Weekly podcast listeners Wednesday that if gold’s “not between $1,500 and $2,000 in the next 18 months, I'm dead wrong."
Gold is showing signs prices are well supported at the $1200 level, although a break above $1230 an ounce is needed to set the stages for much higher gains. But don’t expect much in the way of gains over the next several weeks as the seasonally slow summer doldrums drag on.
Several factors are influencing the gold market and stirring debate between the bear and bull camps including the euro-gold trade, China’s stance toward gold reserves, Central Bank buying (and now selling!), and physical demand.
Many bullish analysts point to plenty of support for higher prices coming from safe-haven concerns. It’s these concerns, rather than pure supply/demand fundamentals, that have brought prices 13 percent higher in 2010, which gives many an eternal pessimist reason to warn the gold market may be experiencing a bubble waiting to burst.
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