Gold enjoyed a strong bounce on Monday to once again reach the technically and psychologically important $1200 an ounce price level. The usual suspects were involved. Traders protected themselves with short coverings. Bargain hunters displaced money from the cash markets to cover short market risk and buy at what is perceived to be value levels. Safe haven demand contributed as well, as traders and investors remain skittish over valuations in paper assets such as equities and bonds.
The surge on Monday made sense as gold hit a five week low on the previous Friday. The ongoing Greek debt crisis gave solid reason for safe haven buyers to accumulate gold at the depressed levels reached last week. U. S. dollar weakness also contributed to the rise in gold prices as the yellow metal rose over $30 to north of $1210 an ounce. Silver bounced nicely as well, and is now trading at over $16.50 an ounce.
Gold coin and bullion investors use the results of the Federal Reserve Open Market Committee meeting (FOMC) this week to direct their gold investments. While no change in interest rates are expected and Chairwoman Janet Yellen is not scheduled to speak, clues in any comments made could provide pricing insights of gold moving forward.
With gold now holding its own over $1200, further stabilization is expected and with any luck we’ll see a quick run to $1250.
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