Gold drops modestly after largest weekly gain since 2008
Gold drops modestly after largest weekly gain since 2008 by Michael J Kosares for USA Gold
Gold dropped modestly in the wake of last week’s big $140 runup – its best weekly performance since 2008. It is off $8 at $1618 as we begin a new week. Silver is down 43¢ at $14 – a reminder of investors lingering concerns about deflation. Overall financial markets continue to react skittishly to the advancing coronavirus and the severe economic damage it has wrought. Financial Times reports this morning that the already strong demand for physical gold is likely to remain in place with weakening currencies globally and negative real rates of return continuing to dominate investor thinking.
Credit Suisse summons memories of the 2008-2009 financial crisis (See our Chart of the Day below) in a recent update to its gold forecast. “We remain major long term Gold bulls,” says the Swiss bank in an advisory relayed by FX Street, “with the market encouragingly back above its 200-day average having held above key support at $1452/1446. It’s important to note that Real Yields have stopped rising and we still believe a similar dynamic will play out to 2009 when after a sharp initial correction in 2008, gold eventually went on to make new all-time record highs. Resistances above $1700/05 are eventually seen at $1734, the 78.6% retracement of the 2011/15 down move, then the $1796/1803 corrective highs from 2011/12. We still look for new record highs above $1921.”