Tuesday, November 13, 2007

Precious Metals Take Big Step Back

From Reuters:

“Gold fell more than 3.5 percent to a one-week low on Monday as sliding oil prices and a rising dollar prompted investors to cash in on bullion's recent lightning rally to 28-year highs.

Dealers also pointed to some influence from a ripple of risk aversion that ran through equity and foreign exchange markets with a knock-on effect on gold prices.”

From the Associated Press:

“Sanchez said he expects more volatility of this magnitude in the months ahead, with gold likely to see $20 to $30 swings more frequently, as investors wrestle with uncertainty. The commodities markets have been buffeted in recent months by the looming threat of inflation on the one hand and, on the other, the concern that economic growth in the U.S. is slowing.”

From CNNMoney:

“Commodities like gold tend to benefit from volatility in the financial sector since they are perceived as a safe-haven investment. Conversely, if the economy shows signs of improvement, gold prices fall as investors favor more high-risk, high-return investments…”

“…Sanchez added that he expects gold to continue its upward trend, since the financial markets remain volatile. ‘We're not out of the woods yet,’ he said.

Fluctuations in the currency market, high energy prices, geopolitical concerns, credit market turmoil and fears of inflation will continue to support gold prices, Sanchez said.”

From the Los Angeles Times:

“Adjusted for inflation, the metal is far from the old peak. It would have to rise to about $2,200 in today's dollars to match it, according to the World Gold Council, a mining-industry-funded group.

Gold has been in a mostly steady uptrend since 2000, when it sold for about $275 an ounce at year's end. Its advance has coincided with a boom in commodity prices in general, as demand for raw materials has soared in burgeoning economies such as China and India.”

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