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Gold at New 2-Month High on Investment Fears

August 25, 2010 at 19:31 by Andriy Moraru

Gold reached a new high level since July 1st today as the investors continued to bet on the weaker global growth and bought save haven assets, including the bonds, some currencies and all the precious metals.

Gold takes a prominent position among the commodities — unlike crude oil (which is reacting quite badly to the latest recession signals), the gold futures are the major beneficiary of the ongoing market uncertainty. It’s rising for the second day in a row today, with the beginning of its latest uptrend wave being on July 28. Gold is a nice alternative to the bonds with more volatility and margin trading.

The commodity is going up along with the silver, palladium and platinum. We’ll continue to witness a strong positive correlation between the gold and the US treasuries in the future. Tom Pawlicki of MF Global Ltd. said about it:

Gold can continue to compete with Treasuries for investment as opportunity costs of holding gold are low due to falling interest rates.

Spot gold is now trading at $1,238.74 as of 17:29 GMT after closing at $1,229.92 yesterday. The historical maximum for the gold is located at $1,264.78.

If you have any questions and comments on the commodities today, use the form below to reply.

2 Responses to “Gold at New 2-Month High on Investment Fears”

  1. Luca Troiani

    Hy, my name is Luca, I follow your blog from several months. I congratulate with you for the interesting things you write.
    I’ve a question for you.
    I read that gold was near a relative top on last monday and was close to correct.
    Then after the bad news about the house sales in the US and the downgrade of Ireland it rallied.
    Do you think that the fear for the last news will continue to push up the gold or the metal will return to follow the down pattern it had until the tuesday session at the Comex?

    Thank you.
    Luca Troiani

    [Reply]

    enivid Reply:

    Yes, that ca be a driver for gold, but it will meet some strong resistance level soon.

    [Reply]

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