Insights into the Gold and Silver Market Oct.02/07
Forexmentor.com Forex Trading Price Action
Gold and silver are looking like attractive investments, given the U.S. dollar’s record slide against major currencies. Credit concerns are also fuelling the rise in gold prices. Gold is heading for a seventh straight annual gain, closing in on its highest level in 28 years. Gold hasn’t been this high since Jan. 21/80 – rising 10% in September alone. Gold has rallied in five of the past six bear markets for the dollar. Gold has climbed 16% this year, while the dollar has dropped 6.3% against a basket of six major currencies.
Gold appears to be an especially good buy, given that inflationary pressures are building. Another consideration is the fact that jewelers typically increase their holdings of gold during the months of September and October. Silver has climbed 5.5% this year, making it a good bet too.
With the housing market’s woes in the U.S., it’s almost a sure thing that the U.S. Federal Reserve will add more liquidity to the system by cutting borrowing costs for a second time this year. Gold usually performs well during periods of liquidity.
Technicians see the dollar rebounding and gold prices falling, based on historical price charts, and that would trigger a decline in gold.
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