As one of the first beneficiaries of panicked markets, gold has jumped higher over the last few days, trading up to $1433 and now with May highs of $1465 in its sights.
If this rally had taken place later in the year it would be easier to feel more convinced about its longevity, as there would have been a greater volume of business. At present, volumes in commodities, like equities, are still very low and unlikely to return in strength until we move into September and the City returns to full strength. In comparison to previous years, this current flight to the safety of gold has been a muted response.
An analysis of the price action over the last 12 months goes some way to calming the optimism of bulls, as it is clear that the moves higher we’ve witnessed of late do not have the same power or aggression compared to recent collapses, most obvious in the mid-April fall of $211 in two trading days.