April 10th Weekly Gold Market Update

Gold observers have been watching keenly to see where the market would go over the last few days and now we have an answer. It’s not been a very dynamic week overall but a trend is slowly starting to emerge from the volatility of recent months, and so far it’s looking cautiously positive – but not overwhelmingly so. Gold started last week at a high of $1,214 thanks to positive weekend trading, but slowly declined through the whole period to close at $1,207.30. Looking at the detailed figures, though, we find that while the decline looked steady it really wasn’t and a sharp drop on Thursday took it below $1,195. Friday then saw a healthy recovery and the spot price ended the week moving strongly upwards. Overall last week saw gold gain $5 over the previous period, and while that’s definitely a modest increase it is an increase, the latest in a series. That’s why analysts willing to step forward and state an opinion think an upwards trend is starting to show.

Another encouraging sign is that once more gold is reacting in a predictable way to the equities markets. Admittedly this showed itself in the metal’s decline through most of the week while the Dow Jones Industrial Average and FTSE 100 rose, but with the global economy still looking troubled it’s likely shares will soften in the not too distant future and gold should be well placed to benefit from that. The spot price did break free from equities on Friday to rise in concert with both major indexes, so obviously other factors can override the link. Most analysts suspect that yet again the Eurozone’s turmoil is to blame for that. Greece managed to make its latest loan repayment to the IMF on Thursday, staving off default and ejection from the single currency yet again; while keeping the troubled Balkan state in the Euro is a political objective with a lot of determination behind it the reality is the Eurozone would be a lot better off without them, and as the possibility of Grexit recedes again the Euro, which had stuck just below $1.10, sagged back to around $1.06. That’s bad news for US exporters, of course, and there’s a good chance the Dow will adjust downwards this week. If it does expect gold to rise more strongly as some investors move from suddenly risky stocks and others abandon the sinking Euro.

Meanwhile crude oil has eased up a small fraction, with WTI finally managing to break through $50 last week – it finished Friday at $50.79 after weeks stuck in the high 40s. Brent hasn’t done as well, possibly due to renewed rhetoric from the Scottish Nationalists who’re still trying to gain control over much of the North sea, but it’s also managed to stay above $55 all week. Overall though, oil still isn’t a very tempting prospect for investors.
Looking at the week as a whole it seems that even if gold hasn’t been setting the world on fire recently it is looking solid at the current price and there’s every reason to believe it will keep rising. Take advantage of its relative cheapness and get ready for some more action soon.

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