As some are beginning to express skepticism that the rally in gold prices and exchange traded funds (ETFs) couldn’t possibly last, gold goes ahead and touches on another new record today.
Gold futures hit new record highs in trading today, soaring above $1,150 an ounce on weakness in the dollar and gold’s appeal as an “alternative currency.” Matt Whittaker for The Wall Street Journal says that in additional to seasonal jewelry buying, gold’s demand is feeding on itself. As the price goes higher, it entices more investors to buy bars and coins for themselves. (Read about the new gold miners ETF).
Where gold goes from here is anyone’s prediction.
The case for a correction: some analysts think gold is overbought, and that a correction could be just around the corner. At the moment, says Rediff Business, gold is getting support from a weak dollar.
The case for more: John Wasiliev for The Age reports that there are numerous near-term factors supporting the price of gold, he says, all underpinned by a volatile but generally depreciating U.S. dollar. Chinese and Indian investors are also creating plenty of demand for the precious metal. (Other reasons gold prices could inch higher yet.)
For now, investors are still cautious about another market pullback. This trepidation is giving reinforcement to related gold investments. But if a correction shows up anytime soon, have an exit strategy at the ready. Our strategy is to use the 200-day moving average; if gold dips below this line, it’s a sell signal. (How to follow trends).
The largest gold ETF, SPDR Gold Shares (NTSEArca: GLD) now has holdings at 1,113.833 tonnes, down from a record 1,134.03 tonnes in June, reports Chikako Mogi for Reuters.
For more stories about gold, visit our gold category.
- iShares COMEX Gold Trust (NYSEArca: IAU): up 29.3% year-to-date
- ETFS Physical Swiss Gold Trust (NYSEArca:SGOL): up 15.3% since inception
- SPDR Gold Shares (NYSEArca: GLD): up 29.4% year-to-date
For full disclosure, Tom Lydon’s clients own shares of GLD.