Risk appetite keeps gold prices in check

By Pete Southern in Gold and Oil News | December 15, 2010 20:30 |

US equities remain near 2010 highs as the Dow flirts with the 11,500 level. Renewed appetite for riskier investments has kept gold prices under wraps in recent weeks.

One ounce of gold currently trades for $1,386.90 on the New York NYMEX. This is down $8.90 from Tuesday’s (December 14) closing price of $1,395.80.

Consumers appear more confident heading into the home stretch of the holiday shopping season. Many retailers have expressed the belief that holiday season and December sales reports are going to product better than expected numbers when January earnings releases hit.

While still a problem for the economy, the jobs sector has seen positive indicators recently with consistent declines showing up in weekly jobless claims reports. More Americans working is a good thing for the economic picture heading in 2011.

Housing markets have remained relatively stable in the last half of 2010 despite widespread concern than Congress made a mistake allowing home buyer tax credits to expire at the end of April.

If equity interest is an indication, investors are prepared to dip their feet in higher risk investments in the next few months.

Gold reached an all-time high at $1,426 the first week of December before quickly retreating below $1,400.

The short-term set up for gold prices could paint the picture for what is to come in 2010. Some analysts have predicted gold could move as high as $1,800 to $2,000 in 2011.

However, significant improvements in the US and global economies may prompt gold speculators to leave those investments and get more aggressive in high risk buys.

Even if interest in gold as a safe money investment wanes, some experts, including goldmoney.com’s James Turk, believes gold still has to catch up with years of under performance with regard to inflation.

In the very near-term, gold speculators must decide whether to push through $1,400 again, or retreat for a while.

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