Gold May Rebound With US Economy Slowing

Posted by Rob

February 18, 2008

The slowing US economy may lead to higher Gold prices as the Federal Reserve lowers interest rates.

Gold is typically a commodity that becomes more appealing during times of economic slow-down or as a means of risk aversion.

“Eighteen of 31 traders, investors and analysts surveyed by Bloomberg advised buying gold, which fell 1.8 percent last week to $906.10 an ounce in New York. Seven said to sell, and six were neutral.” – Bloomberg

A Look At The Chart

Last week Gold losses surprised analysts, however looking purely at the technicals we can see a narrowing support and resistance on the GDX daily.

The 200-day moving average is in an up-trend and the price action is moving well above. The price action remains choppy and in line with the 55-day moving average.

The blue line on the chart shows the support line where we saw a large pull back in November and December. There doesn’t appear to be any divergence with the RSI, and following market opinion of bullish Gold, any further interest rate cuts in the US spell a good day for gold bulls.

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