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February 03, 2010
Where to for gold?
Dave Marrs
Business Day
An amazing thing happened on the way to the gold market: the gold bulls went quiet. This has come as a rare and happy moment for gold sceptics who argue that the metal’s claims of being a reserve currency are overblown at best and specious at worst. Markets came down substantially over the past months with the return of doubt about the sustainability of the global economy.
Yet the slide did not produced any new substantial rally in the gold price. Why is that? Partly because gold is sitting so pretty that any further gains require something more than merely another bout of market Armageddon.
Gold hit a record high recently when it traded at just more than $1200, having gained nearly 30% against the dollar last year.
But that was very much last year’s story. The gold price is now about 7% lower, and it has failed to bounce in response to the latest downturn. Still, the feeling is that gold is on a gradual, long-term upward trend. Safe-haven buying remains an attractive option for investors. That may change, but it’s unlikely to be soon.
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