Gold Jumps on Weaker Dollar

Wednesday, 17 October 2012
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Published in Gold Investing

Gold jumped back up today (Wednesday) on news of a weaker dollar. Growing progress toward a debt solution for Europe weakened the dollar, and gold took advantage, gaining over $6 for the day. While not a double-digit jump, it was nice to see the yellow metal still going strong.

Gold for December delivery GCZ2 +0.34% climbed by $6.50, or 0.4%, to come in at $1,752.80 an ounce. It traded as high as $1,755 earlier on the day, but dropped just a tad before finishing out the trading period on a high note.

Fiscal-Cliff

Gold has been in the driver’s seat lately. Except for three or four days over the last month, the yellow metal has been on the rise. Even on days when it had losses the losses were not significant, and they yellow metal was able to gain back the losses on the very next day. This is due in part to a number of current things happening, as noted by Chintan Karnani, chief analyst at Insignia Consultants in New Delhi. He sent this through an email:

“If the U.S. economy is strong, then fundamentally safe-haven demand should reduce and gold and silver should fall. However, higher gold investment demand at lower prices and central bank accumulation of gold [are] preventing prices from a fall.”

He added: “The fight between gold bearish fundamentals and bullish investment demand factor will increase intraday volatility. So despite the bullish trend, we prefer to be cautious on gold and silver for the short term.”

He finished by saying that Medium-term to long-term traders, “should hold on to their gold and silver investments.”  This is actually very good advice. If you can hold on to what you have, then you will continue to strengthen your portfolio, as well as make monetary gains over the long run.

Gold in India has been strong over the last week, and it is thought that the yellow metal will remain pretty strong there for the entire week. This will allow prices to remain high, as when India is showing demand for gold, then prices are usually strong during that period of time.

While India was once the biggest gold holder in the world (that honor now goes to China), the country still has a high demand for the product, and with that demand comes price gains. Look for gold to make more gains for the rest of the week as we head into the latter half of October.

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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.