Friday, May 29, 2009

Today in Gold: Friday, May 29

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:

"Silver posts biggest monthly gain in 22 years; gold rallies"
Author: Moming Zhou

Main Points: Gold for June delivery finished the week strong, keeping the rally going and ending at $978.80 an ounce, up $17.30. It was the highest finish since February 23, which came a mere few days after eclipsing $1,000 an ounce.

Drops have become rare the last few weeks for gold. In fact, it was the strongest month for the precious metal since November, rising 9.8 percent.

The strong close came on the heals of a report that the first quarter economy contracted at 5.7 percent, not at the 6.3 percent that was originally reported. It could be a sign of economic recovery, and inflation may not be far down the road. Gold, of course, is a hedge against inflation.

Analysis: We love to analyze round numbers and dates when reviewing data, so the 9.8 percent rise during the month is used -- and is indeed impressive. However, it nearly works in this case as gold started it's rally on May 4, the second session of the month. Since May 4, there have been only four sessions on which the price of gold dropped out of a possible 19, and on two of those days the price dropped less than $1.50. Since the start of May 4, the price of gold is up $90.60, or 10.2 percent.

As the experts have been saying of late, there appears to be little resistance. Hitting and surpassing $1,000 appears to be inevitable. The question is what happens once the price does hit that magic number. In February, it was a very temporary achievement.

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