Oil Rise Leads to Gold Hedging Gains
The rising price of oil sent gold prices up in London. The demand for gold as an inflationary hedge led to rising prices on the commodities market.
Gold is joined by other precious metals seeing a rise in demand with prices rising for platinum, palladium and silver. With oil trading within one percent of $120/bbl, precious metals have seen increasing demand as a hedge against inflation.
“Fresh highs in oil have prompted some anti-inflationary hedging,” said James Moore of TheBullionDesk.com - Bloomberg
Gold reached $890.93, a rise of 0.5 percent today. Gold has moved inversely to the USD, with gold gaining 7 percent, whilst the US dollar has lost 7 percent in value so far this year. Oil has risen by 24 percent in this same period.
Technical Chart: GDX Daily
After a fall in the stock value of Market Vectors Gold Miners (GDX) equity value, we have seen a sharp rise in value in recent days marked by large rises in the price of crude oil.
The 200-day moving average remains in a positive trend, whilst the price action sits well below the 55-day moving average, which is flat/slightly downwards.
A look at the 14-day RSI shows the price hasn’t reached the 30 (oversold line), however, there is a sharp bounce upwards which is in-line with the price action for GDX.
With oil prices rising, precious metals including gold look likely to continue rising in value as they offer hedging potential for traders.
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Hi,
I have been invested in gold / silver stocks the last 6 years, the best sector to be in the last 6 years and the next 10 years.
Gold is so cyclical, you can go in and out every year and make a killing. Whenever gold goes down and gold stocks will go down, you buy the ones that fall below the 200MVA and keep for 9-10 mths, you will always make good $ but the ones that helped me earn the most are the ones I kept over the years like GG, SSRI and AEM. SSRI was $4+ when I bought it and the highest this year was about $40+ I think if my memory does not fail me :).
Thanks for dropping by my blog.
Cheers
Jamy