Gold tries to hang on to $1,100

By Pete Southern in LiveWire Economics Blog | November 13, 2009 19:23 |

While oil and several major currencies have been major beneficiaries of the weak dollar, gold has really shined in light of the less desired greenback. One ounce of gold currently fetches $1,104.52, according to goldmoney.com.

Gold closed at an all time high of $1,116.80 on November 11th and it has surged aggressively over the last several weeks after eclipsing its previous high of $1,020 in October. The long term upward trend in gold has actually carried on for most of the decade.

The price of an ounce of gold was around the mid-$200s level around the turn of the century. The old rule of gold investing that the commodity would naturally reverse its course after a significant move in one direction of the other certainly has not held true in this latest move up.

Speculators have helped gold stay the course consistently much longer than many ever expected. In the near-term, the devalued dollar and continued expectations of lower interest rates from the Fed have heightened interest gold. In the long-term, speculators more and more realize the safe money investment of gold compared to riskier high growth investments.

Some leading analysts expect gold to continue to rise over the next few years, perhaps into the $3,000-5,000 per ounce range. This sounds extremely remarkable, but those analysts believe that gold has only begun to adjust for inflation that was never factored into its value until the last several years. Perhaps that same mentality of gold reversing itself caused investors to promote under valued gold for too many years.

Whether it is adjusting to inflation or simply more investors believing the global economic picture is still going to be cloudy for sometime, there is not question that gold enthusiasm has never been higher.

Gold has a low point near $989 on its 60-day chart. With its high point just touched near $1,116, this makes for an incredible two month range of $127. The two month range for gold is over $200, and perhaps most impressively, gold has climbed nearly $400 from hits low point of $734.90 on a one year chart.

The momentum gold has might last only as long as the Fed decides to maintain a low interest rate policy, effectively keeping dollar interest low. However, consumers and speculators will ultimately have a big say on the dollar’s value and the interest in safe opportunities like gold investment.

Neil Kokemuller
9:49 AM EST
Friday, November 13, 2009

Neil Kokemuller is an Associate Professor of Marketing at Des Moines Area Community College in Des Moines, Iowa, USA. He has a MBA from Iowa State University. He is also in house stock market commentator at Live Charts UK, where you can find real time charts and share prices.

Please note: The information provided in this article is intended for informational and entertainment purposes, and not as advice for financial decisions or investments. Actions taken on the basis of the information shared is at the sole risk and discretion of the individual. Currency investment poses significant risk of loss.

Pete Southern About Pete Southern
Pete Southern is an active trader, chartist and writer for market blogs. He is currently technical analysis contributor and admin at this here blog.


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