Published : October 27th, 2011
Gold is coming to life again - and looks poised to move higher in the weeks and months ahead. Having fallen precipitously from its all-time high just over $1,923 an ounce in early September to a recent low near $1,540 in early October, a peak-to-trough correction of some 20 percent, gold has been, of late, range-bound, trading between $1,640 and $1,680.
Having moved to the top of this range and even slightly higher, I sense gold is just now resuming its long march upward, a march that could, before long, carry the price to the $1,850 region and perhaps even to its historic peak of $1,923 by the end of the year.
The Safe-Haven Paradox
Ironically, Europe’s continuing sovereign debt crisis - a situation that should promote fear-driven demand for gold - has, in recent weeks, weighed heavily on the yellow metal’s price. In addition, a sharp reversal in speculative positions on futures exchanges and other derivative markets has contributed to gold’s two-month consolidation.
Ordinarily, investors and analysts might expect Europe’s impending economic and political disaster to send gold prices rocketing skyward - but this has not yet been the case. Instead, it triggered “safe haven” demand for the U.S. dollar and boosted the greenback’s exchange rate against the euro to gold’s detriment. .......
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