This is an interesting report which gives rcompelling reasons for the upward momentum in gold - how far will it run is the big question. My crystal ball sees $315 .... then if a break through $327.50 ... all the way to $400+
Here is the report:
"Gold Bounces Back - May Hit New Peak
20.05.2002 15:27 Gold bounced back close to its highest level this year today as investors piled into the safe haven asset in face of a sick dollar and fears of renewed violence in the Middle East.
Gold hit $312.40 a troy ounce in European trading, gaining an early $1.50 from the levels at the end of last week to race within sight of the 2002 year high of $313.65 an ounce that was hit on May 7th.
Dollar weakness, which makes the precious metal more attractive to investors outside the United States, stoked gold's rally, traders and analysts said.
”With the US dollar on the ropes, at least for now, the yellow metal should remain firm and is likely to challenge the highs of year,” said John Reade, metals analyst at UBS Warburg.
The dollar hit fresh 2002 lows against the euro, Swiss franc and yen today, extending Friday's losses on worries about the US economy and asset market valuations.
Many precious metals analysts see a strong inverse correlation between gold prices and the US dollar index which is at its lowest since October.
”Further weakness in the dollar or profit taking in the equity markets will almost certainly attract fresh investment,” said Standard Bank in London.
”Gold will continue to gain support from the fund community during the week ahead as they protect their long positions which have risen to their highest levels on over six years,” it said.
If gold broke above $313.65 an ounce, it would reach levels not seen since February, 2000.
Tension in the Middle East and on the India Pakistan border also supported the precious metal.
A Palestinian blew himself up near a police patrol in northern Israel on Monday in the second suicide bombing in less than twenty four hours, but killed only himself, police said.
The blast, one day after a suicide bomber killed three people in the coastal city of Netanya, raised fears of a new wave of suicide bombings after a lull in violence that world leaders have been trying to build on to revive peace efforts.
Gold shattered the key psychological important level of three hundred dollars an ounce at the end of March when Israel launched its military thrust into the West Bank after a series of Palestinian suicide bombings in Israel.
The India Pakistan situation also lent background support to the gold price as forces from the two nuclear armed neighbours traded fire across their frontier for a fourth day.
Dollar weakness, stock market selling, jitters over Japan's banking system and a move by miners to reduce the amount of gold they sell in forward markets have also combined to fuel gold's rally this year.
These crowned a winning streak that has taken gold eighteen percent higher since the start of this year and lifted a market which was at twenty year lows just two years ago."
