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Dollar Strengthens Gold Retreats
by Michael Locklear
September 28, 2012 – Gold prices retreated today from yesterday’s high as the dollar moves into a stronger position against numerous other currencies. Despite the slight setback gold still remains in a strong position to make its biggest increases in any quarter since 2010. Announcements this month for major central banks regarding continued monetary easing in order to shore up their economies will continue to push gold into positive territory.
Earlier this month gold reached a near 6 1/2 month high after the Federal Reserve announced its new round of monetary easing known as QE3. The feds promise to buy $40 billion in mortgage securities every month and to maintain near zero interest rates for the foreseeable future, and only continued to be a positive impetus for investors to move into gold. Analysts across the board believe that this measure will ultimately lead to gold prices of $1800 per ounce.
As the dollar continues to gain against the euro, it still remains in a strong position to produce its best quarter since spring of 2010 despite corrections brought about by the strength of the dollar. If the situation reverses and the euro begins to gain against the dollar; well this would be the best possible news for gold.
Analysts point out that the back-and-forth price adjustments on gold currently in the market is to be expected as investors seek to find a more stable market for their investments. We are in the middle of the story, not near the end, so as investors find their footing gold will continue to rise in the foreseeable future.
Forbes is reporting today that the Kitco Gold Survey finds a positive outlook for gold’s future. As European debt continues to be an issue and a lot of loose money will enter the system as a result of monetary easing gold is expected to continue its price increases in the coming week. The survey shows that 83.4% of those who participated are bullish on gold with only 8.3% being either bearish or neutral. Participants in the survey include representatives from investment banks, bullion dealers, futures traders, money managers and technical-chart analysts.
The continued problems in the South African mines along with recent moves by the People’s Bank of China, the continuing economic troubles in the euro zone and the recent promises of the U. S. Federal Reserve of never-ending monetary easing are likely to continue to push gold prices higher and higher for the foreseeable future. It’s only fair to point out that a tiny percentage of the survey takers did indicate that they believe that gold is likely to retreat next week. Nonetheless still others point out that gold is the new sweetheart for investors and the price will most likely reach $2000 per ounce by year’s end.
As the European economy continues to generate bad news and announcements came today that Spain’s borrowing costs are on the rise and shares dropped in the European markets it certainly looks as though the Bulls are right. We only wait and see what next week will bring the ever exciting world of where will gold go from here.
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