Gold traded between $1,177/oz and $1,187 overnight and has continued its move upward this morning and reached $1,199.22/oz a new record nominal high – a fraction away from the psychological $1,200/oz. Gold is currently trading at $1,197/oz and in euro and sterling terms, it is trading at €793/oz and £722/oz respectively, near record nominal highs in both currencies. Gold rose by 14% in sterling terms in November and by 10.6% in euro terms. Gold is also at record highs in Swiss francs showing that it is not solely concerns about the dollar that is leading to higher gold prices. Rather it is concerns about currencies in general and the effect that the crisis will have on the monetary system.
The crisis in Dubai has led to mixed messages from the markets with equity markets remaining buoyant while the dollar has fallen and gold rallied again. Many market participants remain complacent about the serious and possibly systemic nature of the Dubai sovereign default and the risk of other sovereign defaults (including of European monetary union member Greece). These real risks will lead to further safe haven demand for gold – particularly from strong hand long term buyers such as pension funds and creditor nation central banks.
The recent sell off was fast and steep (some $50 in one day) and was needed to correct the overbought state of the gold market and shake out the weak hands. This has happened and could set the stage for further gains with $1,250/oz now a viable price target for year end. However, with gold having returned 13% in November, it is quite possible that further consolidation is needed in the $1,100s prior to forays into the unknown territory over $1,200 per ounce.
Silver
Silver traded around the $18.50/oz range overnight and it has also experienced an increase this morning. Silver is currently trading at $18.75/oz, €12.43/oz and £11.33/oz.
Silver rose by over 14% in November and was one of the top performing assets. It remains less than half of its nominal record price in 1980 and very undervalued from a historical basis (see our recent research article on silver – http://www.goldcore.com/research/silver-set-soar-it-did-1970s.
Platinum Group Metals
Platinum is currently trading at $1,460/oz with palladium at $370/oz and rhodium at $2,800/oz.
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