How much higher can gold go?

Gold currently sits over $140 higher than its late December lows, having added over 12% since.

As Peter Martin pointed out just before the weekend, gold has had its most successful week in almost six months. Shifting the market’s mindset towards the precious metal is not easy, but over the last two months there has been a strong bullish trend in the metal.

One of the reasons support was found in late December was because it was widely perceived that, if the gold price moved below $1200, profits would become marginal, and a number of operations at the larger mining companies could become untenable; the knock-on effect to the supply side of the equation therefore came under scrutiny. The second major reason that has helped to drive the gold price higher has been the looming reduction to the US debt-purchasing scheme, and the market’s fears over how traders will behave without the safety net of quantitative easing below them.

Arguably these two driving forces are beginning to become less imperative and profit-taking in a, at least, 10% move higher might creep back in.  

Spot gold chart

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.