Investing Knowledge

LONDON (ShareCast) - Another failure near the $1,000 mark in Gold has again prompted a sell-off in the yellow metal. Since March last year Gold has tried and failed to break through $1,000 area on 4 occasions. There are a number of key support levels coming into play in the short term. There is a minor trend line support around the $905/$910 area, and then below that there is the 40 week, or 200 day moving average, which has supported the market since the end of January. On the upside the trend line currently at $996 is currently acting as a cap on the Gold price. A break above this key level could well presage higher levels, and sustain a significant move above the psychologically important $1,000 level.

It is also interesting to note how Gold has underperformed against Silver and Platinum over the last 6 months. Since the beginning of the year, silver has made gains of around 35%, as has Platinum, against a Gold advance of around 6%. What is even more noteworthy is that, even though Gold has held its value quite well against the US dollar, against the Euro and Sterling, it is well off the highs of this year. In mid February this year Gold hit highs of nearly £700 an ounce against sterling, and nearly €800 an ounce against the Euro. Since then the price of Gold has lost nearly 20% of its value against both, trading around £575 an ounce and €670 an ounce. This effect has no doubt been a result of recovering stock markets as investors have piled back into equities, and taken profits from the records highs of Gold against these currencies. You can see quite a good correlation between the FTSE100 and the price of Gold against sterling in the last 6 months, and it has been quite noticeable just after the Gold price peaked, that the FTSE bottomed out. Now that stock markets appear to have peaked the price of Gold against the pound appears to be beginning to turn around. So what does this mean for Gold against the dollar? With Gold still being quite close to its US dollar highs, around $1,000, a return to bullish sentiment in Gold against Sterling and the Euro could send it through the $1,000 area quite easily. For periodic TA updates follow me on Twitter

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