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The Run-Up Continues

September 11, 2007

Gold drifted higher on Tuesday and held within sight of a 16-month high, aided by a weaker dollar and speculation about a cut in U.S. interest rates. Gold rose as high as $705.10 an ounce. The metal hit its highest since mid-May 2006 at $707.10 on Friday against the backdrop of renewed concerns about the strength of the U.S. economy and a weaker dollar. Gold rose to a 26-year high of $730 in May last year.

“The market is positioned for another move on the upside. More importantly, I don’t think the market was over-extended when we went through $700. So we have still got the capacity to build on long positions,” David Holmes, director of precious metals sales at Dresdner Kleinwort Investment Bank, said.

“And we are entering into the Diwali season (Indian festival) and we still have some credit concerns. I would be looking for gold to consolidate above $700 and then make progressive moves up towards $710, then $720 and then try to get through the $735 level,” he said.

The festival season in India, the world’s largest gold consumer, peaks in early November with Diwali — the festival of lights. Gold is considered an auspicious metal in the country and buying surges during the period. We shall see! 

Gold closed up another $9 on Tuesday.  :-)

Written by Ernie · Filed Under Gold News 

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