GOLD MARKET REPORT – August 23, 2011
After recent highs for the yellow metal setting record-breaking prices sometimes several times in a single day, a healthy correction is not a bad thing. Gold prices fell on Tuesday 1.6% to end at $1,861.30 an ounce as global equity markets posted gains.
On Monday prices came within a hair’s width of $1,900 at $1,899.40 for yet another intraday record breaker. A healthy market is one which has corrections along the way of an upward trend, and you can bet that investors are eagerly sitting on the sidelines now waiting to buy as soon as the correction dips a bit more hoping to ride the bull.
The Swiss bank is now forecasting gold to surpass $2,000 an ounce before the year is up, but it issued a statement of caution for inevitable corrections along the way. Brett Arends from the Wall Street Journal said
“the investing world has finally started to wake up to the inconvenient facts that (a) the US government is broke, (b) the US political system is broken, (c) Greece is bust, (d) Portugal and Ireland may well be bust, (e) Ditto Spain, (f) Maybe ditto Italy, and (g) the European political system is broken as well.”
The dollar followed suit uncharacteristically today falling short against major currencies as weak data from the US surfaced and drove its value down against the euro. This development had investors expecting that the Fed will try to take further steps to support the US economy by printing more money.
The euro rose slightly when data showed that economic activity wasn’t as slow as expected. But experts are anything but optimistic about the solvency of the euro. Alan Greenspan, former chairman of the US Federal Reserve said
“the euro is breaking down and the process of its breaking down is creating very considerable difficulties in the European banking system.”
Crude oil also took a hit today as continued weak economic data and lowered growth forecasts from economists shook investor’s confidence as well as concern over Libya and how it will affect the price of oil. In other commodities, silver also retreated back 2.4% to $42.29 per ounce, and copper gained 1% to settle at $4 per pound.
At 16:00 (EST) the spot gold price was $1,826.50 (down $65.70 on the day)