Gold Reaches Highest Level In 8 Weeks

Recent intense deflationary pressure had taken the shine off gold but with the dollar sliding yesterday (Wednesday), inflation came back to the fore causing gold to rise by more than 1.2%. This morning the metal was over $943, the highest in 8 weeks. This is a strong signal and it could be time for the resistance levels to be tested. If $946 is breached, the next level to look for would be $967.

Silver was a little more sluggish than gold with only a 0.5% gain. It touched $14.40 this morning before moving back to $14.30. This could signal a correction, as $14.40 represents a double top. However, the fears of inflation will not have passed silver investors by and given its price compared to gold, appetite should still be there, giving it a longer term bullish outlook.

A Standard & Poor’s announcement this morning revising their outlook of the UK economy to negative from stable, will be bearish for sterling on the foreign exchange markets and consequently should be bullish for gold in sterling terms. S&P are now predicting that debt will reach 100% of GDP.

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