The gold price has fallen back in the last 2 days after rallying past its previous high established in Dec 2009. At this point I suspect gold will find support at the $1220 level. If we turn to the currency markets, the Euro is destined to rally after absorbing the hits caused by the Greece, Portugal and Spain debt issues. The identification of the debt problem was months-years away.
The debt restructuring is really good news because its going to mean curtailment of those practices which caused the problem. So, as they say, buy on the news. The EUR should recover, as its currently at an important historical support. I think this ought to provide good support for a strong gold price in USD terms.
If I am wrong, then we can see that the gold price can fall back to around $1125/oz. The fact that the gold price has breached the previous high is little comfort, as it is not very convincing at this stage. We need a further advance before the market will take comfort. We ought to thus look for the Euro for direction. At this point I see gold advancing further this week!
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Andrew Sheldon www.sheldonthinks.com
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