November 11th Weekly Gold Market Update

Gold had been going through some unpredictable price shifts for weeks now, and last week hasn’t made things any clearer. It’s been a very up and down period and it leaves the spot price in an uncertain position. The previous week saw a hesitant recovery crash to a stop with a huge fall to around $1,165. When the markets opened on Monday there was a brief pause, then a renewed fall that took gold to an alarming $1,140 by the close of trading on Tuesday. Then on Thursday morning it started to climb again, and by the time the last calls went through on Friday the price was back up to $1,178.50. Overall that’s a $14.25 gain on the previous period, nowhere near enough to make up for the losses but heading in the right direction once more. Will that movement continue?

It seems that confidence in equities still hasn’t completely rebuilt itself, because while the major markets climbed overall the Dow Jones was slightly hesitant and the FTSE 100 took a couple of noticeable dips. There’s certainly no sign of a slide in stock values right now, but it’s likely gains weren’t sturdy enough to lure in more cautious investors and that probably gave gold the extra demand it needed to pull itself up a bit.

The other big indicator is oil, and while crude prices are still well down on where they were in early summer both standard and Brent showed slight gains last week. This could point to a slight firming up in the overall commodities sector, and again that’s got to be good news for gold.

It’s definitely too early to say that gold has turned the corner; we’ve seen too many recoveries fizzle out over the last few months, and the week was definitely a mixed one – $1,140 is a scary number to be talking about, creeping within shouting distance of a five year low. It would be nice of some support started to emerge above that figure, and if the spot price manages to get back above $1,200 this week there’s a good chance of that happening. The economic recovery is still shaky and there’s simply no good reason for gold to be down where it is, so barring some serious rises in equities we should see the progress made over the last couple of days continuing. Ideally we’d like to see gold safely over the $1,200 mark by the end of the week, and pushing for $1,250 the week after. If that happens some confidence – and support – should start to reassemble itself.

What to do right now? Unless you have gold you’ve been sitting on for five years or more it’s definitely a bad time to sell. Old cheap stocks might be worth selling when the price passes $1,225, but right now it’s best to hang on and wait for better conditions. On the other hand if we see a rise past $1,250 it’s worth looking at buying, because the chances are good you’ll be able to realize some profit in the fairly short term.

 

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