Gold at $700 Again as Silver Underperforms

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Every time investors breathe a sigh of relief and feel the subprime storm has been weathered, some other piece of news hits the headlines that spooks the markets again. This is gold time!.

Its been a long time coming, but the gold price breached the $700 barrier again on Friday - at one time peaking (very briefly) at $707, before slipping back to end the week just about at the $700 mark. Gold investors will be waiting with bated breath to see what direction the metal price takes next week.

...The latest US figures suggest a downturn in employment which some feel could be a precursor to the US economy moving into recession, and when the US sneezes the rest of the world tends to catch a cold. Markets are getting more and more nervous by the day as can be seen by the volatility in world stock exchanges over the past few days. Every time investors breathe a sigh of relief and feel the subprime storm has been weathered, some other piece of news hits the headlines that spooks the markets again. This is gold time!...

So, we will see what next week brings. It is possible that gold will falter and drop back to the $680s, but given the $700 psychological barrier has been breached I suspect it will move up to trade in the $700-$720 range for a time, and then maybe move up to the next plateau and so on. Continuing dollar weakness will move it up, temporary dollar strength will likely bring it back. We're probably not ready for a huge breakout yet - at least I hope not for the sake of the overall world economy.

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