Gold Higher as Stocks Pounded
Gold caught a bid today as stocks got hit hard. At one point today, the Dow Jones Industrial Average was down over 400 points as growth fears, concerns over the Euro zone and ebola took its toll. Today was another wild ride for equities in what has been a volatility-filled last couple weeks. Gold has hung in there during the recent turbulence and could potentially be poised for further upside.
There are a number of things happening currently that could help propel gold higher. First of all, there are growing concerns about an economic slowdown. The Fed in its recent comments alluded to this point and cited a stronger dollar among other factors that could potentially weigh on growth.
The Euro zone has become a focal point once again. Greek bond yields are on the rise once again, and further trouble could be brewing in the Euro zone which is already battling deflationary pressures. This could be a potential powder keg....
The stock market is seeing volatility that has not been seen in some time. Whether or not this is simply a needed correction in a market that has risen steadily remains to be seen. There certainly is the possibility of further investor angst and resulting selling in stocks and risk assets. This could potentially help boost gold and precious metals as investors look for alternative asset classes to put money to work in.
Ebola and geopolitical risks are also likely taking their toll and could potentially drive buying in gold. As the level of uncertainty rises, investors may decide to flock to perceived safe-havens such as gold.
The gold market may have put in a bottom recently after testing the $1183 area in the overnight session recently. More short covering and fresh buying could potentially drive prices sharply higher in the near-term and a pop in gold prices of $100-$200 per ounce is a definite possibility.
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16 Oct 2014 | Categories: Gold
