by Alasdair Macleod, Gold Money:
After a very sharp run-up in prices last week, gold and silver consolidated these gains, drifting slightly lower over the week.
Gold was almost unchanged from last Friday’s close at $1236 last night (Thursday) but silver was down 35 cents at $15.40. This morning in early European trade gold was marked down, presumably on the basis there might be some bullish speculators looking to reduce their positions ahead of the weekend.
The dollar strengthened moderately against the euro, which for currency index purposes is its major counterpart.
Equity markets rallied strongly in what appears to be a bear-squeeze. In other words, global markets have been on pause for the week, awaiting further developments in monetary policy.
It is worth putting gold’s recent performance in a broader context. The next chart shows the gold price in US dollars, with the 13-week and 40-week moving averages.
For the first time in over two years the gold price has risen substantially above the 40-week moving average. Not surprisingly, the 13-week MA is turning up strongly as well, which is relevant because it gives a moving snapshot of quarterly performance. While it would be dangerous to rule out attempts by vested interests to knock the price, gold’s strength coincides with a market reassessment of the future course of dollar interest rates, and therefore of the dollar itself. A bullish “golden cross” formation, whereby the 13-week crosses above the 40-week, is set for early next month, assuming the gold price holds above the $1140 level.
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