Posted by: Ben Levisohn on September 2, 2009
After months of stagnation, gold is poised for a breakout. The precious metal rose over 22 points to close up 2.3% today, the biggest move since March. Strangely, there seems to be no solid reason for gold’s sudden rise. The Wall Street Journal calls it a “safety-play.” MarketWatch blamed economic data. Reuters attributed the rise to a weak dollar. And Bloomberg cited investor demand.
They’re all grasping at straws. The dollar dropped only .4% and stayed within its recent range. Inflation, another common reason for investor’s to buy gold, appears to be under control - at least for the time being. And the stock market, barely budged after yesterday’s drop.
Action Economics, which provides online interest rate and currency analysis, said:
Sources suggest that a couple large macro funds have been persistent buyers following a bullish research piece by a prominent investment bank.
Whatever the reason, gold is approaching an inflection point. As Barclays Capital noted:
A break of 976 would appear to confirm a bull run, initially targeting 1033… Historically, the time is ripe for a sustained advance, as recent bull trends have occurred in odd numbered years, with breakouts occurring during September.
Is it time to get ready for a gold rush?