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Gold Rallies To Eight Month High

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Gold Rallies To Eight Month High
gold rally

The gold rally keeps on chugging up that mountain, as prices briefly topped $1,200 an ounce yesterday -- the highest point since last June. Gold futures are up 12.4% in the last five weeks, while silver futures have recorded an 11.28% gain. Gold has completely wiped out the losses incurred when the Fed hiked interest rates.

Spot gold closed Monday at $1,189.00, after hitting $1,200.92. Overnight action was choppy, before gaining late in the London session. Shortly after the New York open, gold jumped to $1,199.70, which sparked some moderate profit taking (you can hardly blame the short term speculators in this case.)

gold market

Momentum seems to be building for gold, as not only is the physical market booming, gold ETFs logged the largest one-week gain since March 2011. The healthy gains this week are despite the absence of the Chinese. Chinese markets are closed all week for the Lunar New Year celebrations. Risk-off sentiment in Asia was heightened overnight as police clashed with demonstrators in violent riots in Hong Kong.

The dollar dropped modestly this morning after being slightly higher overnight, which is a bullish factor for gold. On the other hand, oil futures slid to give away early gains this morning as worries over a large build in US crude stockpiles.

Of course, the main factor in gold's great performance so far this year is the flight to safety caused by the volatile, plummeting global stock markets. Some analysts believe this is the inevitable correction of stock prices inflated by share repurchases, combined with disappointing earnings.

Technical Numbers

Charting-Gold-Market

Today, we're expecting first support at $1,183. If that falls, next support should be $1,174. First resistance is at $1,201, with the next hurdle being $1,206.

A close above $1,200 will catch the attention of many traders and investors who have been on the sidelines, or have been focused on equities, and not really paying attention to precious metals.

The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product

About the Author

Everett Millman

Steven Cochran

Precious Metals Market Analyst
BS University of South Florida (2002)

A published writer, Steven's coverage of precious metals goes beyond the daily news to explain how ancillary factors affect the market.

Steven specializes in market analysis with an emphasis on stocks, corporate bonds, and government debt. He writes a monthly review of the precious metals markets for SurvivalBlog.com.

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