Gold Reaches New High

Posted by Rob

January 25, 2008

Gold reached an all-time high Friday 25th January when it passed $920 a troy ounce. The price spike was seen due to a South African power shortage that temporarily halted mining in the country.

The halt is a safety precaution, as the mines rely on the power supply to extract water from deep mine shafts, as well as for ventilation.

Precious metals are also rallying due to the weakness of the US dollar as well as further Federal Reserve interest rate cuts in the US, and the price of oil rising above $90 a barrel.

A Look At The Chart

From the daily chart for GDX Gold we can see a sharp rise in value on the release of more negative trading figures by major Wall Street banks, as well as the emergency interest rate cut by the Federal Reserve.

By looking at the Fibonacci line, we can see there was a significant retracement to the 61.8% line towards the end of December. Since that time, the price action moved swiftly, taking Gold stocks and Gold spot price soaring.

By looking at the 14-day RSI we can also see slightly higher highs and higher lows as the RSI sits within converging support and resistance lines. It is expected that Gold will continue to rally, especially after fears of further interest rate cuts plague the US economy. The RSI also shows a bounce off the support line giving extra impetus for further gains.

We previously highlighted Gold gains back in 2007, with an expert prediction of Gold hitting $1000 in 2008. This prediction looks ever-more likely with recent economic conditions, particularly in the US.

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