The price of gold is hovering just under $1.400 per troy ounce as it consolidates well above its April low of $1.321 per ounce which set the bottom and the current support level. The major resistance level is now at $1.550 per ounce, which was the previous high-volume support. The correction, 31% from the high of $1.923 to the low at $1.321, seems to be over and is consistent with previous corrections within the current bull market. Only 2008 saw a larger correction with a drop of 32% (from $1.002 to $681 per ounce), and it set the stage for a major rally and new highs in 2009. As Jim Rogers recently pointed out in an interview with GoldMoney “most corrections go on long enough to scare a lot of people and scare them out of their positions”. If we were to judge by the reports of leveraged speculators exiting their positions, it seems that this weeding of “weak hands” has been achieved.
The explosion of physical gold buying that we’ve seen as a result of lower prices, with especially avid buying in Asian markets, is a good indicator of pent up demand and the growing understanding of the difference between “paper gold” or financial gold, with its leveraged bets, fractional bullion banking, multiple ownership of the same ounces of gold and physical, tangible precious metal.
Read the complete article at GoldMoney here.
Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.