High Oil Price and Weak Dollar Suggest Continuing Gold Strength

Source: Mineweb.com  (9/11/07)

...On that occasion (May 2006) the rise above $700, and the rapid fall back again back below the $700 level took place in the space of only around two days! That suggests today may be the crunch day - and prospects are looking bright so far.

I'm sure gold followers will find it significant that this time around gold has already remained above the $700 an ounce mark longer than it did when it shot up to peak at around $730 in May 2006. On that occasion the rise above $700, and the rapid fall back again back below the $700 level took place in the space of only around two days! That suggests today may be the crunch day - and prospects are looking bright so far.

Two of the major factors which many analysts feel are key to gold price strength - a strong oil price and a weak dollar - are both in play at the moment and if this situation continues, and there's little reason to suggest it won't, then the gold price should at the least consolidate in the $700-$710 range - and possibly move forward from that. Paul Walker, CEO of specialist gold analysts GFMS, speaking to Mineweb/Moneyweb on Friday felt that perhaps as much as $750 was in sight in the short term, but beware a sudden spike in the price. On past experience a big gold price spike can be just that - a spike - and the price can come back as fast as it goes up.

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