After months of stagnation, gold is poised for a breakout. The precious metal rose over 22 points to close up 2.3% today, the biggest move since March. Strangely, there seems to be no solid reason for gold’s sudden rise. The Wall Street Journal calls it a “safety-play.” MarketWatch blamed economic data. Reuters attributed the rise to a weak dollar. And Bloomberg cited investor demand.
They’re all grasping at straws. The dollar dropped only .4% and stayed within its recent range. Inflation, another common reason for investor’s buy gold, appears to be under control, at least for the time being. And the stock market, barely budged after yesterday’s drop.
Action Economics, which provides online interest rate and currency analysis, said:
Sources suggest that a couple large macro funds have been persistent buyers following a bullish research piece by a prominent investment bank.
Whatever the reason, gold is approaching an inflection point. As Barclays Capital noted:
A break of 976 would appear to confirm a bull run, initially targeting 1033… Historically, the time is ripe for a sustained advance, as recent bull trends have occurred in odd numbered years, with breakouts occurring during September. link...
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