Two Steps Forward, One Step Back
Aug 23rd, 2008 | By Doug Casey | Category: Financial News, Gold MarketGold held up through Hong Kong trading, but slid from London through to the noon hour, rallied there, but hit another selling wave during the Globex to finish near its intraday low at $822.20, down $13.40. For the week, gold gained 4.6%.
Platinum’s big gain proved to be a one-day wonder as the metal was off from Europe through mid-morning, dropping below $1400, after which it did stage a late rally to push back to $1417/oz., down $32. For the week, platinum was up 4.4%.
Silver was higher in Hong Kong but from London through the late morning it really hit the skids, falling nearly 60 cents, then saw an afternoon rally capped in the Globex, driving it to a close at its intraday low of $13.33/oz., down 50 cents. For the week, silver still managed to add 5%.
(Click here for charts)
The day was pretty much as would be expected when the dollar firms and the price of crude plummets. For gold, the fact that (unlike crude) it didn’t come close to relinquishing all of Thursday’s gains was the only solace to be had.
Rising equities also pulled money from the precious metals.
The Hightower Report summarized the day’s action: “The gold market started out weak on Friday morning but after an early morning slide, prices managed to recover and for a short period of time the gold futures managed to regain the 200-day moving average. However, residual strength in the Dollar and a slight decline in overall financial sector anxiety in the US markets seemed to prompt a profit taking setback in gold and other flight to quality instruments. In fact, even the crude oil market came down sharply in what seemed to be a flight to quality liquidation. Perhaps soothing comments from the US Fed Chairman and upbeat US dialogue from Warren Buffet simply prompted an exodus from gold. In the end, seeing the US equity market manage a sharp rise for a large portion of the trading session clearly seemed to shake out as a negative for the gold market.”
“[Thursday’s] gains again prove gold’s role as a hedge against inflation as well as periods of economic unrest and geopolitical tension,” wrote James Moore, an analyst at TheBullionDesk.com.
“While further short-covering could boost gold in the coming sessions, we would look for technical resistance to emerge around $845,” Moore added.
Looking ahead, “Fundamentals remain in gold’s favor, but after the damage of the last several weeks, it will take trading within a range, and a little time, before gold can move back up convincingly,” said Adrian Day, of Adrian Day’s Asset Management in Annapolis, Maryland. “The downside has to be very limited.”
Source: Two Steps Forward, One Step Back
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Doug Casey is a contrarian investor, sought-after public speaker and author of several books. His work "Crisis Investing" held the position of # 1 bestseller on the New York Times list for 26 consecutive weeks. Doug's unusual views on the economy - and just about everything else - have gained a huge following in the investment community, and it certainly helps that his stock recommendations of undervalued junior exploration companies have made his subscribers millions. Now in its 27th year, Doug's monthly newsletter, the International Speculator, is one of the most established and esteemed publications on gold, silver and other natural resource investments. Together with the Casey Energy Speculator, it covers a broad range of carefully selected stocks with the very real potential of double- and triple-digit returns within 12 to 24 months.