Tuesday, March 24, 2009

Today in Gold: Tuesday, March 24

Each weekday, Cash4Gold will troll through the web's gold banter and post some of the bigger or more interesting stories. Following is a run-down of today's features:

"Gold looks good for years to come"
Author: Peter Koven
Website: www.Network.NationalPost.com

Main Points: As pointed out recently on this blog, experts who view the short and long term value of gold favorably currently outnumber those who think the price has peaked. Another example of such experts is J.P. Morgan analyst Steve Shepherd.

Driven largely by tough economic times, Shepherd points to gold as a safe haven investment. "We expect increased investment demand to make up for any losses from traditional jewellery markets in India, China and the Middle East to underpin gold prices," he said.

Two of the key factors for the demand in gold are declining mine production and central bank sales.

Analysis: The latter two factors were also pointed out in the Merrill-Lynch report from a couple of weeks back. Mines are aging and closing and banks are holding onto their gold. Since gold cannot be printed like cash, it can drop in supply -- thus raising the demand.

"Gold prices fall on move out of safe-haven assets"
Author: The Associated Press
Website: www.IHT.com

Main Points: Gold for April delivery dropped $28.70 to $923.80 on Tuesday. This follows a huge rally for riskier investments on Wall Street, that results in a pull-out from the safe haven investments like gold. Wall Street took a modest hit today, but due to the fact that gold closes two hours early, a further adjustment to its price resulted today.

Analysis: Not surprisingly, the value of the dollar and price of oil have increased of late -- two factors that often behave in an inverse relationship. After rising nearly 8% last Thursday, gold has given back nearly half of its gain.

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