Prince Forex
05-09-2011, 09:17 AM
easy-forex
http://www.mazikao.net/vb/imgcache/71893.png
Is the gold price bubble ready to burst?
In recent weeks the price of gold (http://www.easy-forex.com/gtw/164838.aspx) has seemed to defy the laws of gravity, making fresh trading highs every day before hitting a record above $1,900 an ounce in mid-August. The parabolic (http://www.easy-forex.com/gtw/164838.aspx) price rise of gold ended abruptly with a sharp two hundred dollar (http://www.easy-forex.com/gtw/164838.aspx)sell off shortly thereafter and has continued to experience increased volatility with $50 price (http://www.easy-forex.com/gtw/164838.aspx) swings. The increased (http://www.easy-forex.com/gtw/164838.aspx) volatility raises concern that the uptrend in gold is ending and the meteoric price (http://www.easy-forex.com/gtw/164838.aspx) rise may have created (http://www.easy-forex.com/gtw/164838.aspx) a bubble that is about to burst.
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Saudi (http://saudigold.blogspot.com/) nationals hold (http://saudigold.blogspot.com/) significant US paper (http://saudigold.blogspot.com/)***ets and the recent (http://saudigold.blogspot.com/) downgrade (http://saudigold.blogspot.com/) of the US credit (http://saudigold.blogspot.com/) rating, coupled (http://saudigold.blogspot.com/) with global (http://saudigold.blogspot.com/) equity market (http://saudigold.blogspot.com/) volatility, makes gold (http://saudigold.blogspot.com/)an important part (http://saudigold.blogspot.com/)of an investment (http://saudigold.blogspot.com/)portfolio to protect wealth (http://saudigold.blogspot.com/)and manage risk (http://saudigold.blogspot.com/).
Quantitative (http://easy-forex2027.blogspot.com/)easing by (http://easy-forex2027.blogspot.com/) the Federal Reserve (http://easy-forex2027.blogspot.com/)and weakening of the US dollar are major factors driving (http://easy-forex2027.blogspot.com/) the price (http://easy-forex2027.blogspot.com/) of gold. With US interest rates at a record low, and the US (http://easy-forex2027.blogspot.com/)budget deficit (http://easy-forex2027.blogspot.com/) expanding at a record (http://easy-forex2027.blogspot.com/) pace, the US dollar faces an increased risk of devaluation (http://easy-forex2027.blogspot.com/).
Gold (http://easy-forex2027.blogspot.com/)has emerged (http://easy-forex2027.blogspot.com/)as an alternative (http://easy-forex2027.blogspot.com/) to the US dollar and other currencies (http://easy-forex2027.blogspot.com/).
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The Saudi central bank (http://easy-forex2023.blogspot.com/)is ranked 16th (http://easy-forex2023.blogspot.com/) among world central (http://easy-forex2023.blogspot.com/) banks in relation (http://easy-forex2023.blogspot.com/) to their holding (http://easy-forex2023.blogspot.com/)of gold reserves.
Although the fundamentals (http://easy-forex2023.blogspot.com/) suggest that gold prices may be headed (http://easy-forex2023.blogspot.com/) higher (http://easy-forex2023.blogspot.com/), some economists warn that the sharp price rise and increased (http://easy-forex2023.blogspot.com/) volatility in the price (http://easy-forex2023.blogspot.com/) of gold makes gold less of a safe haven and risk capital (http://easy-forex2023.blogspot.com/)are the only funds (http://easy-forex2023.blogspot.com/) that should (http://easy-forex2023.blogspot.com/) be deployed in the gold market now.
This (http://easy-forex2022.blogspot.com/) may discourage (http://easy-forex2022.blogspot.com/) investment (http://easy-forex2022.blogspot.com/) flows and pave the way (http://easy-forex2022.blogspot.com/) for more short-term selling (http://easy-forex2022.blogspot.com/)pressure (http://easy-forex2021.blogspot.com/) in gold (http://easy-forex2021.blogspot.com/).
As long (http://gold-trading2011.blogspot.com/) as global (http://gold-trading2011.blogspot.com/) economic (http://gold-trading2011.blogspot.com/) uncertainties remain unresolved it is likely that (http://gold-trading2011.blogspot.com/) consumers (http://www.easy-forex.com/gtw/164838.aspx), governments (http://gold-trading2011.blogspot.com/), central (http://gold-trading2011.blogspot.com/) banks (http://gold-trading2011.blogspot.com/) and investors will continue to buy gold (http://www.easy-forex.com/gtw/164838.aspx) to try to protect (http://www.easy-forex.com/gtw/164838.aspx) their wealth (http://www.easy-forex.com/gtw/164838.aspx).
Forex trading involves substantial risk of loss. Do not invest money you cannot afford to lose.
EF Worldwide Ltd, registered in Guernsey
Nicolas Shamtanis
Dealing Room Manager
easy-forex
www.easy-forex.com (http://www.easy-forex.com)
http://www.mazikao.net/vb/imgcache/71893.png
Is the gold price bubble ready to burst?
In recent weeks the price of gold (http://www.easy-forex.com/gtw/164838.aspx) has seemed to defy the laws of gravity, making fresh trading highs every day before hitting a record above $1,900 an ounce in mid-August. The parabolic (http://www.easy-forex.com/gtw/164838.aspx) price rise of gold ended abruptly with a sharp two hundred dollar (http://www.easy-forex.com/gtw/164838.aspx)sell off shortly thereafter and has continued to experience increased volatility with $50 price (http://www.easy-forex.com/gtw/164838.aspx) swings. The increased (http://www.easy-forex.com/gtw/164838.aspx) volatility raises concern that the uptrend in gold is ending and the meteoric price (http://www.easy-forex.com/gtw/164838.aspx) rise may have created (http://www.easy-forex.com/gtw/164838.aspx) a bubble that is about to burst.
The primary (http://www.easy-forex.com/gtw/164838.aspx) driver for the price of gold is investment (http://www.easy-forex.com/gtw/164838.aspx)flow seeking a safe haven and investors (http://www.easy-forex.com/gtw/164838.aspx) hedging against risk (http://www.easy-forex.com/gtw/164838.aspx). Global concern about sovereign debt risks in the US and Europe (http://www.easy-forex.com/gtw/164838.aspx) and uncertainty about the global (http://www.easy-forex.com/gtw/164838.aspx)economy (http://www.easy-forex.com/gtw/164838.aspx) are the major (http://www.easy-forex.com/gtw/164838.aspx) risks fuelling (http://www.easy-forex.com/gtw/164838.aspx) demand for gold.
According to the World Gold Council, demand (http://www.easy-forex.com/gtw/164838.aspx) for gold remained strong in the second quarter of 2011. China and India remain (http://www.easy-forex.com/gtw/164838.aspx) the largest buyers of gold; however the World Gold Council reports that Saudi Arabia (http://www.easy-forex.com/gtw/164838.aspx) was one of the top gold (http://www.easy-forex.com/gtw/164838.aspx) buyers in 2010, but demand has declined by 21 tons in Q2 2011 or 16% below the previous (http://saudi4gold.blogspot.com/) year’s levels. The weak (http://www.easy-forex.com/gtw/164838.aspx) demand for gold from the Middle East region has been attributed (http://saudi4gold.blogspot.com/) to the rising price of gold and continued regional unrest discouraging (http://www.easy-forex.com/gtw/164838.aspx) purchases of gold (http://saudi4gold.blogspot.com/) jewellery. Saudi Arabia is the largest jewellery producer in the Middle East (http://saudi4gold.blogspot.com/) using 140 tons of gold (http://www.easy-forex.com/gtw/164838.aspx) a year.
The fundamentals (http://saudi4gold.blogspot.com/) for gold (http://saudi-gold2011.blogspot.com/) remain positive (http://saudi-gold2011.blogspot.com/)with prices likely to find support from three major investment (http://saudi-gold2011.blogspot.com/)trends (http://saudi-gold2011.blogspot.com/); portfolio diversification, hedging (http://saudi-gold2011.blogspot.com/) against inflation/ currency (http://saudi-gold2011.blogspot.com/) risk and central bank demand (http://saudi-gold2011.blogspot.com/). Investors will continue (http://saudi-gold2011.blogspot.com/) to look to gold for portfolio diversification because (http://saudi-gold2011.blogspot.com/) it is not closely (http://saudi-gold2011.blogspot.com/) correlated with most other ***ets.
Saudi (http://saudigold.blogspot.com/) nationals hold (http://saudigold.blogspot.com/) significant US paper (http://saudigold.blogspot.com/)***ets and the recent (http://saudigold.blogspot.com/) downgrade (http://saudigold.blogspot.com/) of the US credit (http://saudigold.blogspot.com/) rating, coupled (http://saudigold.blogspot.com/) with global (http://saudigold.blogspot.com/) equity market (http://saudigold.blogspot.com/) volatility, makes gold (http://saudigold.blogspot.com/)an important part (http://saudigold.blogspot.com/)of an investment (http://saudigold.blogspot.com/)portfolio to protect wealth (http://saudigold.blogspot.com/)and manage risk (http://saudigold.blogspot.com/).
Quantitative (http://easy-forex2027.blogspot.com/)easing by (http://easy-forex2027.blogspot.com/) the Federal Reserve (http://easy-forex2027.blogspot.com/)and weakening of the US dollar are major factors driving (http://easy-forex2027.blogspot.com/) the price (http://easy-forex2027.blogspot.com/) of gold. With US interest rates at a record low, and the US (http://easy-forex2027.blogspot.com/)budget deficit (http://easy-forex2027.blogspot.com/) expanding at a record (http://easy-forex2027.blogspot.com/) pace, the US dollar faces an increased risk of devaluation (http://easy-forex2027.blogspot.com/).
Gold (http://easy-forex2027.blogspot.com/)has emerged (http://easy-forex2027.blogspot.com/)as an alternative (http://easy-forex2027.blogspot.com/) to the US dollar and other currencies (http://easy-forex2027.blogspot.com/).
With (http://easy-forex2026.blogspot.com/) around 86% of Saudi (http://easy-forex2026.blogspot.com/) revenue coming from oil (http://easy-forex2026.blogspot.com/) and oil priced (http://easy-forex2026.blogspot.com/) in US dollars (http://easy-forex2026.blogspot.com/), gold is also being (http://easy-forex2026.blogspot.com/) used as a hedge against a weaker (http://easy-forex2026.blogspot.com/)US dollar and to diversify US dollar reserve holdings (http://easy-forex2025.blogspot.com/)in Saudi Arabia (http://easy-forex2025.blogspot.com/).
In addition, the IMF (http://easy-forex2025.blogspot.com/) recently warned of the risk of rising (http://easy-forex2025.blogspot.com/) inflation in Saudi Arabia (http://easy-forex2025.blogspot.com/), which also reflects higher (http://easy-forex2025.blogspot.com/) food prices (http://easy-forex2025.blogspot.com/) and rising rents (http://easy-forex2025.blogspot.com/).
Central (http://easy-forex2024.blogspot.com/) bank demand (http://easy-forex2024.blogspot.com/) for gold (http://easy-forex2024.blogspot.com/) is rising as they (http://easy-forex2024.blogspot.com/)add gold to diversify their reserves. The World Gold Council (http://easy-forex2024.blogspot.com/) reported in (http://easy-forex2024.blogspot.com/) June that Saudi (http://easy-forex2024.blogspot.com/) Arabia doubled its gold reserves to 322.9 tons from 143 tons (http://easy-forex2023.blogspot.com/) in 2009.
The Saudi central bank (http://easy-forex2023.blogspot.com/)is ranked 16th (http://easy-forex2023.blogspot.com/) among world central (http://easy-forex2023.blogspot.com/) banks in relation (http://easy-forex2023.blogspot.com/) to their holding (http://easy-forex2023.blogspot.com/)of gold reserves.
Although the fundamentals (http://easy-forex2023.blogspot.com/) suggest that gold prices may be headed (http://easy-forex2023.blogspot.com/) higher (http://easy-forex2023.blogspot.com/), some economists warn that the sharp price rise and increased (http://easy-forex2023.blogspot.com/) volatility in the price (http://easy-forex2023.blogspot.com/) of gold makes gold less of a safe haven and risk capital (http://easy-forex2023.blogspot.com/)are the only funds (http://easy-forex2023.blogspot.com/) that should (http://easy-forex2023.blogspot.com/) be deployed in the gold market now.
This (http://easy-forex2022.blogspot.com/) may discourage (http://easy-forex2022.blogspot.com/) investment (http://easy-forex2022.blogspot.com/) flows and pave the way (http://easy-forex2022.blogspot.com/) for more short-term selling (http://easy-forex2022.blogspot.com/)pressure (http://easy-forex2021.blogspot.com/) in gold (http://easy-forex2021.blogspot.com/).
As long (http://gold-trading2011.blogspot.com/) as global (http://gold-trading2011.blogspot.com/) economic (http://gold-trading2011.blogspot.com/) uncertainties remain unresolved it is likely that (http://gold-trading2011.blogspot.com/) consumers (http://www.easy-forex.com/gtw/164838.aspx), governments (http://gold-trading2011.blogspot.com/), central (http://gold-trading2011.blogspot.com/) banks (http://gold-trading2011.blogspot.com/) and investors will continue to buy gold (http://www.easy-forex.com/gtw/164838.aspx) to try to protect (http://www.easy-forex.com/gtw/164838.aspx) their wealth (http://www.easy-forex.com/gtw/164838.aspx).
Forex trading involves substantial risk of loss. Do not invest money you cannot afford to lose.
EF Worldwide Ltd, registered in Guernsey
Nicolas Shamtanis
Dealing Room Manager
easy-forex
www.easy-forex.com (http://www.easy-forex.com)