Gold moved up through an $1145 chart point Wednesday without pausing for breath, and yesterday it gained further ground through the $1150 mark and stayed there overnight. The initial price boost this time appears to have been coming from the North American markets, but has been fairly flat, but supportive, in Europe and the East, even though the dollar has been making gains in its index against other currencies. The dollar may have come back a small amount against the Euro yesterday, but the overall significance of the latest moves in gold despite dollar ‘strength’ should not be overlooked.
For the chart followers, the next real point to watch is a breach of the $1162 level. If this occurs the technical analysts see the price continuing upwards to at least test the December high of $1226 and possibly beyond.
But, gold has already hit a new high in Euro terms and there seems to be evidence that India, the world’s largest consumer, but a fairly price sensitive market, is buying again as the next wedding season approaches thanks to a strong rupee coupled with the beginnings of a belief that current higher gold prices are here to stay.
It certainly also appears to be the big financial institutions and hedge funds which are driving the price at the moment. It was not so long ago that gold was being pushed up by Eastern markets and then New York would come in and the price would fall back again, so the fact that North America seems to be at the forefront of the latest price advance is an important indicator. As we have noted recently ETF purchases have remained strong in the face of a rising gold price, so the market certainly seems set fair. The world’s biggest ETF, the SPDR Gold Trus, for examplet has just hit a new record at 1140.433 tonnes Look for further short term price strength and maybe those predicting $1,500 gold by the year end may not be too wide of the mark.