Los Angeles, CA – The price of gold fell nearly 7% last week to $1600 an ounce on strong U.S. dollar gains and the December 14th announcement by the Federal Reserve saying they would refrain from taking new stimulus measures on the economy. The Fed’s announcement combined with signs of increased funding stress in Europe helped move the dollar to the highest level since January against the Euro. As a consequence, Gold moved in the opposite direction to the U.S. Dollar.
“Gold took a beating last week” credit Agricole analyst Robin Bhar said. “I expect gold will stay under pressure as the funding stress is increasing the need for liquidity, and gold is seen as one of the assets to liquidate”. A small rally on Friday moved gold back up to the $1600 an ounce mark as investors were more interested in buying gold at a discount, and financial analyst expect gold to remain hovering around this level as trading is relatively thin due to the holiday season.
Catalyst needed to move gold above $2000/Oz.
In order for gold to continue along its 200-day moving average, the precious metal will need to hit $1620. As for short-term outlook on Gold pricing, Silver-Investor.com Found David Morgan said in an interview today, “gold will coil sideways unless something really negative comes out of the Eurozone… I feel that gold will go above $2000 [in 2012], but we need other catalyst to get it up there. We need increased geo-political tensions, we need Europe to go full force with the quantitative easing plan, and we need the U.S. to do the same”.
More and more investors are using Gold as a hedge against inflation. From consumers to central banks, investors at every level are buying gold to protect their wealth. The value of gold has risen continually for 11 years and many financial analysts are saying it will likely continue to rise beyond 2012.
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