Commodities | May 08 2007
By Rudi Filapek-Vandyck
It can hardly be a surprise that in a week dominated by central bank meetings across the globe the international investment community seems to have rediscovered the precious metals as a short term punt on further US dollar weakness. According to various reports, the funds have moved back into precious metals recently. According to our own observation, market experts are increasingly turning bullish on the prospects of precious metals.
FNArena has spotted at least two investment guidance services in Australia that issued a bullish report on gold over the past 24 hours. Others earlier in the curve have simply reiterated their bullish stance.
Gold bullion set an intraday peak for a front-month futures contract of US$728/oz on May 12, 2006. That was the highest level since the third week of January 1980, when gold traded for a very short time at US$850/oz.
Some market watchers are already looking forward to a surge beyond last year’s peak. But before this can happen the metal will first have to move past technical resistance at around US$693/oz – a level that has proven to be of formidable strength so far this year.
As reported yesterday (see “Gold Finally Ready To Move Beyond US$700/oz ?”) an increasing number of market experts believes the metal could finally be ready to make that leap beyond the magic US$693/oz which should open the door towards US$700 and even US$730 soon afterwards.
One of the experts cited in yesterday’s story, renowned market watcher Dennis Gartman, has now increased his weight behind the forecast of a pending break through for the metal.
On Friday, Gartman added to his existing long position. In last night’s edition of The Gartman Letter he writes: [the latest news] “is sufficient to strongly reiterate to those who did not add to their positions on Friday to do so this morning”.
Part of Gartman’s confidence stems from the fact there have been various factors in play which should actually see the gold price weaken, such as a falling oil price, the release of a reasonable job creation figure in the US and even a temporary bounce for the greenback.
The fact that gold stood its ground and held firm is a very good sign, says Gartman, because “if bearish news is not acted upon bearishly, bullish news shall be”.
