Whether you’re an investor or a trader, one thing you look for is strength in the face of opposing news. Last week news came out that Russia didn’t add to its gold reserves in December, China slowed buying, and demand in India had possibly fallen to life support levels. After all, in Econ 101 we learned declining demand leads to declining prices, right?
And, in US pre-market trading this morning, the dollar looks to be continuing its rise from late last week.
In the face of all that, you’d expect to see gold prices plummeting on the open markets. Yet last week raw gold rose above 1200 per oz for the first time in several months, and godl prices are rising slowly off 1180 this morning while the dollar rises.
Normally a 20 dollar change in gold doesn’t get The Gold Enthusiast excited. That’s just trading noise. However, 1200 is a huge psychological level for gold. Above 1200, gold feels expensive in recent terms. Below 1200 feels about right. Twenty dollars either side of 1200 is where the change in opinion happens.
Way below 1200 becomes buying territory…