Gold Rising as Equities Tumble; But Where's It Heading?

In case you didn’t notice, the bullion has quietly made a comeback as stocks fell. On Friday, spot gold surged $22.20 (2.4%) to reach $927.20 an ounce, the six-month high (click to enlarge the following chart from Market Club), after a government report showed that GDP contracted at an annual rate of 3.8% in the last quarter of 2008, the most in 27 years, after a 0.5% decline in the third quarter. The two consecutive quarters of negative GDP growth also marks the official start of a recession, even though economists have long declared that the recession actually began in December 2007.

Let’s get back to gold. After breaking through the $1,000 milestone in March 2008, gold has gone through some rough times. As economies around the world slipped into recession, demands for commodities fell sharply and the appeal of precious metal also faded. At the end of October, gold even dropped below $700. But since then, gold has regained most of the lost ground. Investors again looked at gold as a safe haven amid turmoil in stock markets.

But where is gold heading from here? Back to $1,000? Or, as somebody else predicts, $5,000 in 5 years? There’re also arguments that gold may stay at the current level for a while before any breakthrough.

Comments

[Conan the B...:]

The chart looks like Gold has its hit resistance, Fridays top extending left. With the Dollar continuing its upward trend will Gold be able to continue up?

Natural Gas continues to drop, Will oil remain above $40.

Today's gold premarket spot is down $20 and running below the Future's price unlike what got us up here in the first place.

Time to drop.

Feb 02 04:52 AM

[Roger Knights:]

Thanks for the links. But the "5000 in five years?" link no longer works.

Feb 02 04:53 AM

[ROLEX18K:]

5,000$ Gold is a dream of every goldbug, but it will never happen, already at this prices jewelry retailers are going bankrupt almost in every country, at 5,000$ there will be only sellers and no buyers but it will not come to this as Gold will never brake 1030$.
If you were bears not humans and were going for a winter sleep for 6 months, then you wake up till August 2009 Gold will be no higher that 500-600$.

Feb 02 06:56 AM

[JudeJin:]

rolex18k has been short gold since $900. wow, you're very brave. the gold bugs will only need gold at $1500 to laugh at your stupidity

Feb 02 08:44 AM

[scotty1560:]

a third argument is gold could stay in a trading range..$800-$1000.
dollar is a safe haven right now and maybe that's the play on gold.

I can't see gold much higher based on relationships to items like
oil, which is languishing...but that's my two cents.

banks and consumers are hedging with gold as insurance and may do so
for a long time...the world has significant issues that are not going away anytime soon...fun days are over for so many of us.

Feb 02 11:36 AM

[auto44:]

How about a chart on trust, fear, and greed.

Feb 02 09:56 PM