Followers of KSK will know how I quite often provide updates on the price of gold. Having monitored its spiralling downward fall over a three year period I am pleased to at last report some good news in that the price of gold reached a six month high last week to close at $1,375 per ounce. Having reached this level it seems as though investors are now waiting to see if this level can be sustained or whether or not it is time to take some profits. In fact the price has come back slightly to $1,359.20. It seems that nevertheless trading volumes are good as institutional interest seems to be increasing.
So why has a rise occurred when only at the start of the year traders were talking about a price of $1.20? There doesn't seem to be a single reason…
First of all with what is occurring in the Ukraine (and the stand-off between the Western Powers and Russia) there has been huge volatility in the global financial markets. If one was to examine the previous peaks it was when it was disclosed that chemical weapons were being used in Syria. This does clearly illustrate how the price of gold reacts to international conflict. Trading charts then show how the price of gold drifts lower once the conflict comes to a close.
Then secondly there is the not so publicised debt crisis which is presently unfolding in China. Since 2007 China has become the largest gold producer in the world. China is also the top consumer of gold and the Chinese love to store the metal. So again for the Chinese it is a safe haven.
So for the first time in a long time I am writing about a rising gold price. Where next… $1,425 per ounce or a fall back to $1,300 per ounce? Does this not depend on President Putin and how he steers his armed forces?
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