Gold Investments Market Update

Gold
Gold is up in Asian trading and London trading this morning. Gold was up $17.80 to $945.10 per ounce in trading in New York yesterday and silver was up 54 cents to $18.31 per ounce. The London AM Gold Fix at 1030 GMT this morning was at $951.50, £481.04 and €595.88 (from $932.75, £472.40 and £586.27 yesterday).

It is déjà vu in the markets again today with the dollar falling to new record lows against the euro and oil surging to new record highs above $115 per barrel and gold challenging resistance at $950 per ounce. Resistance at $950 is being challenged as we predicted and a close above $950 could see us soon rechallenge the $1,000 sooner than analysts expect.

The euro hit an all-time record high of $1.5984 this morning despite record inflation in the Eurozone. The U.S. and UK economies are being hit harder than many European economies due to them being less exposed to the housing market falls and the credit crisis and due to the interest rate differential. Both the Fed and the ECB have warned overnight of the increasing risks posed by inflation.

Western economies are losing momentum due to rising average oil and food prices, falling house prices and turmoil in financial markets which will continue to underpin the gold market. In these circumstances it is absurd to suggest that gold is in a bubble despite being one of the few asset classes or commodities that is actually less than half its inflation adjusted high of 28 years ago ($2,300 per ounce).

Real diversification into non correlated assets is now more than ever essential. Risk aversion and capital preservation should remain prevalent in all investors’ minds given the unprecedented challenges facing financial markets internationally.

Support and Resistance
Support for gold is at $905 and strong support is at $880.

Silver
Silver is trading at $18.45/18.49 at 1215 GMT.

PGMs
Platinum is trading at $2060/2070 (1215 GMT).
Palladium is trading at $459/464 per ounce (1215 GMT).

Mark O'Byrne

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