LAWRIE WILLIAMS: Gold ends week above $1,200. Is the bottom in yet?

LAWRIE WILLIAMS: Gold ends week above $1,200. Is the bottom in yet? from Sharps Pixley

The gold price managed to end the past week above the $1,200 level, but still a little below its 50 day moving average, although it did manage to breach that line intra-day, so it is close. But the big question is is it there to stay, or will it turn down again and test its recent low of around $1,183 again?

We have read a number of gold commentaries suggesting the bottom is in on numerous occasions during gold’s decline from above $1,350 earlier in the year, with most such forecasts being overtaken by further declines within a very short space of time. But this time around it does look like there may have been a firm bottom in the low $1,180s. But as we noted in an earlier article this past week, gold has been struggling to remain consistently above the $1,200 level, despite continuing buying pressure.

Goldhas been range bound for most of the past few days between around $1,190 and $1,210 being unable to break out in either direction so far. There are certainly short term headwinds making it difficult for gold to exit of this pattern. The dollar generally has remained fairly strong; the U.S. economy is purported to be sufficiently strong to allow the Fed to initiate another small interest rate increase in December, with three or four more next year, while the effects of the various trade tariffs being imposed by the Trump administration are still seen as being positive for the U.S. economy, although once the likely inflationary effects kick in this perception could reverse. There has also been some settlement in terms of the rehashing of NAFTA as the USMCA (U.S., Mexico, Canada Agreement which promises trade stability between the three North American nations, although when the small print is examined in detail it may leave the participants unhappy with the likely outcome.

The general equities markets have been going on to new records, which has been negative for gold in that investors see better returns elsewhere for now. However we did see some hefty falls at the end of the week, but the big gold ETFs are still seeing withdrawals suggesting funds/institutions are still wary of precious metals. If funds start moving back to the ETFs that would be a good sign that we could be at a turning point.

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Lawrence Williams

Lawrence (Lawrie) Williams is a well known London-based writer and commentator on financial and political subjects, but specialising in precious metals news and commentary. He is a qualified and experienced mining engineer having graduated in mining engineering from The Royal School of Mines, a constituent college of Imperial College, London – recently described as the World’s No. 2 University (after MIT). He has worked in mines in South Africa (gold, uranium and platinum), Canada (uranium), Zambia (copper) and U.K (coal) and holds a South African Mine Managers certificate. He also worked as a gold mining company analyst for one of the major South African mining houses. He left South Africa to join Mining Journal as Financial Editor and worked his way through that organisation to edit Mining Magazine, and then join the Board. He was Managing Director (CEO) of the company for 13 years up until it was sold in 2001. During part of this period he was also President of Nevada-based U.S. company Mining Media Inc which was publisher of North American Mining magazine.