Another False Dawn for Gold?

Source:

...maybe not a false dawn, but perhaps the start of a move to the next gold price plateau unless there is some more heavy-handed action by monetary authorities to stabilise the dollar and keep gold in its cage.

...the end of the week saw an upwards shift in the gold price to over $670 an ounce, where it has remained on Monday, and the question in gold watchers minds is does this represent the next stage in the runup to significantly higher price levels, a new slightly higher trading range, or yet another false dawn?

...Gold fundamentals remain positive for the price. Jewellery demand seems to have accepted higher price levels and appears to have stabilised, or increased. ETF gold investment has continued to rise and now is at record levels. Mine production is flat at best and the price has ridden some pretty high levels of Central Bank sales. The 200 day moving average price has been rising consistently.

To set against this is, almost certainly, the desire of the international monetary authorities worldwide to not see a huge depreciation in the value of the US dollar which would destabilise the world's economic system and the US economy itself, which is still by far the world's largest. It seems likely therefore that, as I have said before, that any upward movement in the gold price (which correlates with dollar depreciation) is likely to be stage managed as far as the monetary authorities are able to do so. Gold will almost certainly continue to rise, but it may take some kind of catastrophic incident affecting the US economy directly, to trigger a major breakout.

So the scenario is, as I see it, an upward price movement through the remainder of the year, but a gradual one. $700 may be breached, but perhaps not yet, but I still believe the $1,000 gold price is an awful long way ahead, and if it is not, then that would suggest collapsing economies on a scale that would be in no-one's interest...

So, maybe not a false dawn, but perhaps the start of a move to the next gold price plateau unless there is some more heavy handed action by monetary authorities to stabilise the dollar and keep gold in its cage.

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