Gold Is Not Yet Safe to buy
With reference to my earlier article on Gold prices are going down? dated May 16, 2010, I have mentioned Gold reached its high at $1249.70 on May 12. After this point gold is trading in a range bound session for the last couple of months. It did reset its annual high to $1266.50 on June 21st even it closed at $1240.70 for the same day. The intraday swing on the day is roughly 3% and it confirms it double top pattern. It made one more attempt to reset its peak on June 28, 2010 and then plunged. As of July 9, 2010, Gold Futures closed at $1209.80 down by 4.48% from its annual high.
The following table is the snapshot of gold future prices as of July 09, 2010.
Gold Future Prices |
|
Month |
$per ounce |
Jul-10 |
1209.60 |
Aug-10 |
1209.80 |
Oct-10 |
1211.80 |
Dec-10 |
1213.70 |
Feb-11 |
1215.70 |
Apr-11 |
1217.50 |
Jun-11 |
1219.50 |
The following table shows how the gold prices reacted on difference currencies for this year. GBP recovered some of their losses against USD since 18 May 2010. EUR is not yet recovered and trading in its low range against USD.
Gold Price |
4-Jan-10 |
9-Jul-10 |
Increased By |
USD |
1118.30 |
1209.60 |
8.16% |
EUR |
775.65 |
956.55 |
23.32% |
GBP |
694.80 |
802.93 |
15.56% |
INR |
51766.11 |
56235.70 |
9.03% |
- Physical demand for gold buying in India is going down in the recent months as the marriage and festival session coming to end for the short term.
- Hedge funds may start liquidating Gold due to rebalancing their portfolio.
- Due to recent plunge in the world stock market, people liquidate gold to cover margin calls.
- As greenback is gaining its strength over major currencies, it is most likely push the gold price down. It will make gold costly for foreign investors especially in Euro Zone. Selling pressure for gold will be more for Euro Zone investor
Gold is currently down by just 4.5% percent from its annual high. By analyzing the historical pattern since 1983, we can see that gold prices can go down up to 25% from its recent peak. When the gold futures hit again around $950.00, it is OK to START buying gold. If it goes down more, we can accumulate gold again as no one knows the exact bottom for any asset class.
Finally Safe Heaven Is Not Yet Safe To Buy.
Posted on July 10, 2010
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