Gold Rally Continues

Posted by Rob

January 3, 2008

Following on from yesterday, Gold continued to rally. The trend has continued today as traders use the commodity as a hedge against inflation worries in the US economy.

It is expected that the Federal Reserve will make further interest rate cuts to revive the slowing economy. “People are still nervous about the dollar. We are seeing a lot of fresh money coming in. $900 is the next level.” – Bernard Sin, Chief Gold trader at MKS Finance.

With this accelerated momentum $1000 or higher is looking more and more likely in 2008. Along with Gold, Platinum and Silver rose.

A Look At the Technical Chart

After temporary bearish performance in the middle of December (note the head and shoulders pattern), we can see Gold has broken above November highs as traders have turned to the commodity as a means to hedge against inflation.

The slow stochastic shows that GDX is well above the 80 mark (green circle on chart), suggesting a future sell-off. However, with the recent momentum it is possibly that we will see the STO remain above the 80 for a while longer. Any fall may be temporary with much positive market sentiment continuing to make Gold an attractive trade.

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