Gold Falls Again Heading Into Weekend

Friday, 11 January 2013
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Published in Gold Investing
Gold fell for the second time in three days as several different concerns continue to hit investors. Topping the list today was the fact that inflation in China topped economist estimates, increasing concern that officials may curb stimulus. This, along with the continued fiscal cliff fighting that will go through February and into March, are just too much for gold to work against right now.

Gold futures for February delivery dropped again, this time by 1.2 percent to come in at $1,657.90 an ounce earlier today on the Comex in New York. A close at that price would be the biggest loss since Jan. 4. Yesterday, the price touched $1,678.80, which was the highest it had been in a week. As you can see, gold is very volatile right now, even more so than usual.

According to the National Bureau of Statistics, China’s inflation accelerated to a seven-month high in December. Bullion climbed 7 percent last year, which was a 12th straight gain, as central banks in Europe, the U.S. and China increased stimulus measures to boost economies. The Asian country is the world’s biggest bullion buyer after India. They took over the number one spot after using the last year and a half to buy up as much gold as possible with their almost unlimited cash supply.

“The market is reacting to China’s inflation numbers,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates, said in a telephone interview from Chicago. “Less liquidity in the system means a slowdown in purchases.”

So what are we to make of all the huge price dips and spikes that gold is experiencing right now? Well, the fact of the matter is that gold is still actually holding up very well, especially when you consider all that is going on right now. The China inflation issue is a new one, and that news only hit today. Together with the fiscal cliff issues, the Euro zone issues, the Fed announcement of stimulus cuts, and other outside factors, one can look at the price of gold and see that it is still doing very well.

Still though, the yellow metal is expected to blow up in 2013 and make a run at or near the $2,000 per ounce price mark. You can still purchase gold right now for a great price (comparatively speaking), and if you are able to hold on to it you are going to see some nice price gains over the next 12 months.
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Jeremy Holcombe

Jeremy is a seasoned finance writer who has been studying the gold and silver industry for many years. His vast knowledge in the precious metals sector led him to Goldco Direct, where he is now one of their most recognized writers both on the site and around the web. Along with being a senior Precious Metals writer for Goldco Direct, he is frequently featured on many financial sites on the internet where they tap into his knowledge about gold. Jeremy is passionate about educating investors about the yellow metal as its price continues to rise to record breaking levels.