The price of gold has dropped significantly in the last couple of days. This correction on the gold market price is technical and will not last long , that’s why we strongly advice to buy gold gradually until the price of gold starts to rise again.
Next friday, Bernanke will speak. If he decides to implement a Q3 program there will be a stability on gold prices for the next weeks to come (even a small downfall). We believe the Q3 announcement will not be announced yet. Let’s wait and see what’s going to happen tomorrow…
Why is this gold price drop technical?
First, there has been a correction on the gold market due to an exageration or simply an awakening in people’s mind who have finally realized this summer that the US dollar and the Euro will ultimately collapse in the future due to high sovereign debts. As a result, investors have bought large amounts of gold.
Secondly, last weeks, chinese investors have used margin calls (a way to invest with a guaranteed asset without having to advance the whole amount of the purchase). The use of that kind of technical investment strategy is limited in time as margin calls can only be made for a certain amount of money that you actually possess. Also, this works only in times of price increase.