Friday, April 24, 2009

Today in Gold: Friday, April 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 prices finish higher as dollar weakens"
Author: Sara Lepro

Main Points: Gold was up $7.50 to finish the week at $914.10 an ounce, largely as a result of a weakened dollar.

Analysis: Impressive. If not for a hiccup on Tuesday when the price of gold rose early only to drop by the end of the day, gold would have been up every day this week. We wondered yesterday if the momentum could be sustained after eclipsing the $900 mark, but clearly it could. Because of that, you have to start reassessing the ceiling. But again, don't underestimate the impact of the gold festival in India on the gold retail industry. Gold retail had otherwise been holding the price down.

"Gold prices surge but can it last?"
Author: Xavier La Canna

Main Points: Consistent with our recent tracking on this blog, gold has had a strong surge during the past week, but cautions investors who believe the trend will continue for the long term.

"I think it will go higher, perhaps as much as $950 per ounce by around the middle of the year," said David Moore, Commodities strategist for Commonwealth Bank, "but we forecast it to fall back to about $875 per ounce by the end of the year, and continue to fall over 2010."

TheAge sites 2008's high of $1,011.25 an ounce and fall to $712.50 in October. Additionally, an investor needs to be confident that economic stability is nowhere in sight to expect further gains in the gold price.

"I think the risks are there for a rebalance (in gold prices)," said Grant Craighead, managing director of Stock Resource. "The safe-haven attributes are what is holding it up and the potential for a return to economic stability and growth is putting that at risk."

Analysis: As we continue to do here, use caution. There is no certainty in this environment. Gold passed a major milestone yesterday by piercing $900 an ounce, but it is a milestone that was also passed a couple of months ago. We'll likely see $950 an ounce again, and we'll likely see it in multiple cycles. Similarly, we're likely to see $850 an ounce in the not too distant future. There is little use attempting to time such a volatile market. If you have gold to sell, the best time to sell it is when you need the money.

No comments:

Post a Comment