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What a Financial Crisis Means for Gold
Fri, Sep 19 2008, 11:01 GMT
by Andrei Pehar
Gold, traditionally a safe haven in uncertain times and a hedge against inflation, has seen tremendous volatility the past few days. The collapse of Fannie, Freddie, Lehman Brothers, AIG, and HBOS has sent investors ducking for cover, many of them turning to gold and causing prices to soar by more than $142 per ounce in a single day.
The announcement of a ban on the short-selling of financial stocks both in the UK and the US capped the rally just as
dramatically, as investors needed access to capital to buy back into what they perceive
to be a safer market. The release of a plan to acquire the remaining bad
mortgage debt left in the markets (about 1/2 trillion worth) should add further
bullishness to the markets (and therefore perhaps more downward pressure on the
precious metal), however other dangers still loom - namely Washington Mutual,
Morgan Stanley, Goldman Sachs, declining home values, continued threat of
recession or a global slowdown, rising unemployment, and a deficit which grows ever larger as a
result of the recent bail-outs.
What does all this mean for the future price of gold? While the long-term
outlook remains bullish, what happens in the more immediate term depends
largely on which side of 845.72 we finish this week's trading on. A close
below means that we will likely spend the following week testing support at
812.08, 795.26, or 774.33; meanwhile a close above would mean we're on our way
back up to re-test resistance at 889.82 and 917.11
The daily 200 moving average is currently intersecting the 889.82 resistance
level, and continued trading above this level may well indicate the start of a
new rally.
Published on Fri, Sep 19 2008, 11:21 GMT
Archive
- Crude Oil: A Key Level to Watch
Published On Thu, Nov 20 2008, 01:43 GMT - The Long-term Outlook for Gold
Published On Wed, Oct 15 2008, 16:04 GMT - How to Determine the Next Likely Direction for Oil
Published On Fri, Sep 26 2008, 12:05 GMT - What a Financial Crisis Means for Gold
Published On Fri, Sep 19 2008, 11:01 GMT - Gold & Silver Both Hit Projected Targets
Published On Fri, Sep 12 2008, 21:22 GMT
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