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Gold Trading Analysis 12 May 2010

Gold Chart 12 May 2010

Whilst the surge in gold prices is a reflection of the deep fears still present in the financial markets it is also driving away the retail customer, especially in India where in has hit Colaba Causeway, the high street of wealthy southern Mumbai.  Here the gold shops would usually be packed in advance of May 16 when Hindus celebrate the Akshaya Tritiya festival by buying gold.  Instead demand for gold is expected to fall by about 50% with many Indians turning to silver instead.  From a technical perspective today’s break above the $1226 high of last December signals the start of a new longer term upwards trend for the spot gold price as we move above last year’s high and break out into new and unchartered territory.  The question now is how far is the price likely to go?  For my own part and as a long term investor myself I believe that $2000 per ounce is not an unrealistic target in the next 2 years and with the depth of price consolidation now firmly established below this should provide a sustained platform in the short to medium term.

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