Monday, September 22, 2008

Gold update

I am posting along term analysis on gold here. Hold has turned up precisely from the level $734 and that was a significant support as I mentioned it in my last post and some comments. There is really nothing great to trade in gold but to wait for volatility to subside.

Have a look at the following graphs:

Gold price volatility is at its near peak with implied Volatility touching 55%

Gold price has been hit hard by the credit crunch as it plummeted 30 percent from its peak

Bid for safe haven has ignited interest in gold in the last one week

Physical demand is outstripping supply as investors lapped up a record 50 tonnes of Gold ETF in just two days

US CPI rising at more than 4%

US PPI rising at double digit rates

Failure of banks and unprecedented infusion of funds from central banks have made gold even more attractive

Central Banks have pumped in a record $518 bns to curb credit crunch apart from the funds extended towards ‘bailouts’

Liquidation by long only funds due to credit crunch has undermined the safe haven appeal for gold

Gold prices to begin the next uptrend if low of $734 holds

If prices breach $734 on a weekly close, gold prices may tumble down to $640 or lower

Next up move to be laboured

Gold may rise with a rising USD in the next up move

Higher energy prices are here to stay in the long term

Gold and silver price moves are not confirming the uptrend

Next up leg in precious metals would be widely participated but volumes would be less

Inflationary pressure would remain strong as rise in money supply would keep all currencies under pressure

USD and gold may rise together in the next few quarters

No comments:

Post a Comment