50% Gold Trading Range?

Might long-term investors want to trade a possible 50% range in the Gold Price…?

HERE WE ARE with the Gold Price pulling back towards $900 after threatening $1,000, writes Julian Phillips at the Gold Forecaster. The Gold Price hit $985 then pulled back into the $930s.

Why the failure to reach and breach $1,000 an ounce? Traders didn’t want to be in the lead in taking gold over $1,000. Now the market needs time to re-group and build up strength. Long-term investors have been on the sidelines since gold ran through the $900 level and Comex Gold Futures & options speculators have jumped in ‘boots and all’ taking it up on a technical basis to just below the $1,000 mark.

Where now? Speculative players have bought nearly 225 tonnes of gold-equivalent in the last four weeks. So many analysts see the Gold Price backing off to $850 or less, before running up to $1,200. If correct, this would give us a healthy trading range of over 50%…a range that even long-term investors should contemplate taking advantage of – if it is going to happen, of course.

But what of the fundamental picture? After all, it has been the long-term investor that has driven the Gold Price over the last year, and he focuses on the fundamentals using the Technical picture to pinpoint his entry and exit points only. Where is he looking for, what is his perspective on such possible moves?

To determine if such a large range in which to Trade Gold will take place based on fundamentals, we have to look at the levels of uncertainty long-term investors now see ahead. The signs of an economic recovery are being glimpsed like tiny fires in a dry forest, and some are even growing fast amid the cold wintry recession. In fact, the US economy shrank slightly less in the first quarter than initially estimated, while corporate profits rebounded so it seems that the recession is moderating.

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