Gold is once more in focus of the investors’ attention as gold spot price per ounce is ranging slightly above the $1,220 per troy ounce mark; we haven’t seen prices at these levels since the 4th of July when gold had bounced from its year lows with concerns over the US Federal Reserve’s plans to restrain its financial stimulus.
With news constantly unnerving markets and after dropping to $1,180 per ounce in June 27(so far the year low), gold made it to a welcoming 1,320 per ounce towards the end of July and a hopeful $ 1,420 per ounce late in August; at that time the $ 1,600 per ounce level seemed almost certain to reach and there were estimates for an all-time high near $ 2,000 an ounce before the end of the year.
2013 gold spot prices
To everyone’s astonishment and dismay, from August 28 gold prices started to decline, trading today 15% lower and showing a steep drop of almost 35 % since the beginning of 2013 with strong speculative trading throughout the year. It is obvious that although there were a lot of professionals and funds who made a lot of money buying cheap and selling high, this was a disappointing year for the majority of investors. No one at this point wishes a stock market atmosphere in the gold market and it really helps to keep an open eye as well as a clear head.
Speculation and manipulation are hurtful for everyday investors and the stability of the market is jeopardized as traders tend to disregard fundamentals and act with greed or emotions of fear and distress. The average investor has seen no profit buying gold at any time this year, while you virtually lose money if you are forced to sell your gold at current prices.
The shine has certainly come off gold since the precious metal hit highs of $1,895 an ounce in 2011, sustained by its status as a safe haven for investors. To see better days, the gold market urgently needs some protection and support.
Government policies should support gold spot prices
Technically speaking, the $1,220-1,230 per troy ounce area is a solid support point, but despite strong buying signals trading volumes are low and the market is moving without direction, On the other hand prices are fluctuating within a narrow range between $1,260 and $1,225 an ounce for three weeks now showing that at this point prices find a strong support. There are more than one models of technical analysis, but currently all analysts agree that we are near the end for this correction.
As the yellow metal’s fundamentals are positive, current prices should lead funds and central banks to abandon their stand-by position (China is a good example since it is known that the country needs to increase its gold reserves) and declare their official support to the gold market, followed by cautious transactions that will stabilize prices. At the moment volatility is the greatest danger.