Once More Into the Breach for Gold

Source: Mineweb.com  (10/15/07)

...If we start seeing competitive devaluations in other currencies that could lead to some probably unwarranted dollar strength (although likely to be temporary) and the recent pattern has seen gold fall on dollar strength. But most analysts would currently recommend buying on weakness as the feeling is that the overall trend continues to be upwards.

For a few hours on both Thursday and Friday the gold price surged through $750 only to be brought back rapidly by profit taking, but it ended the week at just a tiny fraction under the $750 barrier. This week it opened in Asia and then in Europe comfortably above $750, and so far has been moving up steadily, reaching close to $760 at the time of writing, yet again a new 28 year high. With this kind of momentum and price elevation the all-time high of 1980 has to be considered to be in reach within the next few months, if not the next few weeks.

Will it stay or will it go (up or down)? That is the question facing investors at the moment. Probably the one cloud on the horizon for gold bulls is that there are mutterings on the monetary front from the Europeans and Chinese in particular, that the dollar has dropped too far, potentially eroding exports to the US as foreign goods are seen as too expensive. If we start seeing competitive devaluations in other currencies that could lead to some probably unwarranted dollar strength (although likely to be temporary) and the recent pattern has seen gold fall on dollar strength. But most analysts would currently recommend buying on weakness as the feeling is that the overall trend continues to be upwards.

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