Gold Price: A Three-Handed Dilemma

Gold Price has taken a dip recently and perhaps now is a good time to consider buying. However traders who already hold gold from recent purchases are looking for sell signals on the 21st August.  As gold price climbs traders are twitching for their sell button.

Rates were up to 1777.05 October 2012 and plummeted to 1205.9 in June this year. It recovered to reach rates of 1376.05 in August and is continuing a steady climb upwards, but the last time gold price was hit this hard was back in the 1980’s.

Good time to invest?

Overall, this is a good time to invest in gold because there is plenty of travel to be seen either increasing or decreasing in value. Perhaps even short term profits are possible for both buy and sell positions. Traders are expecting a bumpy ride but expect an increase in gold price.

Technical indicators suggest a rise in metal prices is not a question of if they will rise but when

So a long term investment is looking very green for traders. Although don’t overlook short term investments while the price reaches pullbacks along the journey. Physical gold has been in high demand whilst Asian buyers have made bulk buys on bargain bullion prices and jewellery. These buyers are playing the long game and perhaps this bullion will not be seen back on the market for quite some time.

Decline in gold supplies

Another effect on gold prices is the prediction of a decline in supply when miners are predicted to go out of business because of reduced spot prices. Miners are facing the fact that the cost to get this precious metal out of the ground is more than its selling price. This will make buying while prices are relatively low even more lucrative.

When the financial banking crisis began people invested heavily in this precious metal thinking it would not be affected by the predicted currency inflation in response to Quantitative Easing (QE). However, analysts got it wrong!

When QE started in the UK concerns about inflation failed to materialize meaning the balance sheets did not need to be protected by gold. Now people have realised they don’t need to invest in gold, they are cashing in their stocks by releasing funds for other short term investments. However, it is only the super rich who can afford large investments in short term stocks that are juggling with precious metal investments.

Pullback on recent increase

Some analysts have predicted it will drop further, so if you buy now and see a profit perhaps selling for a small profit would be beneficial as opposed to holding your trade open with increased stop losses.  Analysts have noted a bullish market and expected retracements.

Analysts warn that the traditional drivers of demand for gold and other metals have all weakened or reversed in the last few months so predictions are difficult to make.  On one hand we have a decline in supply and in the other a decline in demand. And oddly in a third hand gold price is already low.