Gold Rockets Higher
What a day and night it has been for gold prices. The market has exhibited enormous volatility in the aftermath of the Swiss gold referendum.
The Swiss voted no on the SNB increasing its gold reserves to 20 percent of assets. The potential for the SNB to make this move has kept a bit of an edge in the gold market in recent weeks. Gold prices opened lower last night and made their way almost to the November lows. The market ended up reversing course, however, and is trading up over $40 per ounce today.
This seems to have been a classic case of "Sell the rumor buy the fact" as buyers stepped into the market while shorts scrambled to cover positions. The gold bulls have now retaken the $1200 level, and more gains may be seen in the coming sessions as fresh buying enters the market and more shorts are squeezed out.
Lower stocks today are likely helping gold's case. Japan's credit rating has been downgraded and there are continuing signs of slowing in China. Add to that the ongoing troubles in the Eurozone and some investors appear to be getting a bit worried. Should stocks continue to work their way lower, gold may see some support as investors seek out alternative asset classes.
The dollar index is moving lower today, however, the recent strength seen in the greenback may prove to be an ongoing source of resistance for the gold bulls.
The technical picture in gold is improving. The bears are still in control, but the bulls are showing some signs of life. The next key area of resistance may be seen at the recent swing high around $1208 per ounce. Should gold rise above this level, more fresh buyers may look to establish long positions.
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02 Dec 2014 | Categories: Gold