Gold

It is a bear season in the stockmarket and gold miners are prospering. The possible US recession is the most probable main driver. Gold is seen as the best hedge against both the US recession and the US dollar currency weakness. Gold has returned a neat 20 percent return compared to the S&P which has declined 12 percent. Market commentators relate the current action in the market to what happened during 1979-80, when gold prices trebled within a matter of few weeks. A Fed Reserve rate cut would surely propel gold to new high price levels.

Gold and platinum prices have surged following mine closures in South Africa, a leading producer of the metals. South Africa is second to China in Global gold production and is the top producer for platinum. AngloGold, Harmony and Gold Fields suspended all their mining operations following a national electricity emergency. Mining operations suspensions follow fears of power interruptions would trap miners underground. Mine equipment problems, accidents and maintenance have contributed to a decline in production.

Investment funds are driving the increased demand for precious metals. These price levels haven't been reached in two decades for both gols and silver prices. Higher price levels for gold and silver were driven by turmoil in the Middle East, rising oil prices and a weakening US dollar. The active June contract for gold peaked at $US623 an ounce on Tuesday 18th April 2006. Gold futures haven't seen this since 1980. for silver, May silver, the most active silver contract, hit a high of $US13.68 an ounce, a price not seen since 1983.

With the fall in Oil and Gold recently some traders have probably undertaken some profit taking strategies. There is still Hope for the Resources sector - the fall was governed by no more than "Fear" and "Greed". There may be more volatility in the forthcoming market sessions with fingers pointing to an amount of speculative money that was driving up oil, gold and base metals prices in the beginning of 2006. GSJB Were reckons not to lose hope on the resources sector.

Gold Profit Taking after Recent All Time Gold Highs: Profit-taking has weighed on gold since last Monday when gold futures climbed as high as $US544.50 an ounce, the latest in a series of quarter-century highs for the precious metal.

With Friday's close of $US505.90, however, futures had shed 4.8 per cent, or $US24.30, over the week.

"If you look at charts, there seems to have been a pretty strong correlation of late between the gold and the Australian dollar," he said. And despite a healthier-than-expected US current account deficit on Friday, the US currency weakened.

Gold opened weaker in Asia on Tuesday after soaring overnight to fresh quarter century highs above $US540 an ounce on frantic buying by momentum-chasing speculative funds. Analysts say investors were keen to take profits ahead of Wednesday's anticipated interest rate rise by the US Federal Reserve.

Gold has broken above $US500 an ounce it is soaring. The spot gold price jumped more than $US7 an ounce, or 1.4 per cent, in New York to close at a new 24-year high of $US529.50.

Gold rallied 4.6 per cent last week, its biggest weekly gain in almost four years, on heavy buying from the Middle East and Asia, where investors have been mopping up the precious metal to diversify from the US dollar and US-dollar-denominated assets.

The World Gold Council said demand for coins, bars and bullion-backed shares jumped 56 per cent in the July- September period.