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.