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Last friday’s gold price rally following through this week

As the UK get’s back to work after a freezing, rain-filled double bank holiday (some things really never change do they?), the simply breathtaking gold price rally from last Friday seems to be holding.

As a quick recap on friday morning gold traded as low as $1544/£1008, but after the rather obvious realisation that the central banks of the world would unite in printing in response to some terrible data points in Europe and the US, gold took a one-way express elevator higher.

By the end of the trading on Friday gold stood at $1622/£1055 – good for a 5% rally in $ terms and 4.5% in £ terms – all while stock markets continued to slide and UK gilts slid to a 300 year low and the the 10 year US bond hit a 200 year low.

After such a move it was always going to be interesting to see if there would be any follow through this week to confirm the move, or it gold would slip first before moving higher. Today it seems that those moves on Friday are sticking with gold moving higher to hit $1640/£1060 this afternoon.

In € terms gold is really flying – it is now up some 9% for the year and is now only 4% away from making new all time € highs. Yes, that really is how quickly everything can turn around and move higher.

Gold $:

gold 6 june 2012 Last friday’s gold price rally following through this week (click for sharper image)

Gold £:

gold £ 6 june 2012 Last friday’s gold price rally following through this week (click for sharper image)

Gold €:

gold € 6 june 2012 Last friday’s gold price rally following through this week

Now all eyes are will be on the Bank of England to see if they will announce more money printing tomorrow or will delay some the printing for another month. Note there is absolutely no serous debate about if the BoE will print, but rather whether it will come tomorrow or in July, something we laid out last Friday here.

Most ‘analysts’ are forecasting that the BoE will not print more tomorrow – however some banks (Morgan Stanley) see the BoE printing another £50bn tomorrow. You know, £50bn here, £50bn there, and pretty soon you’re talking about real money.

For our mind we have the chances of a £25bn-50bn increase in the money printing at around 75% tomorrow, but a 100% chance of more money printing in the next 3 months.

And that really is the entire point at this stage of the game. It almost makes tomorrow’s rate decision redundant – it isn’t the when that should concern anyone right now, it is the fact that, like we’ve been banging the drum since that last round of money printing, that it is coming.

Should we get the inevitable tomorrow look for resistance to come in around £1080 – still some 3% away from the highs seen on the day when the BoE last printed. Or to put it another way gold has some making up for lost time to do, and last Friday should be a good warning to you just how quickly it can.

Related posts:

  1. Gold price starts the week higher as Spain’s problems come into focus
  2. The gold price looking to close at a 7 week high after Ben Bernanke say’s he’s ready to print
  3. Gold price now down for the week as Spanish bond yields explode and Italy’s 10 year goes back above 6%
  4. Huge gold price breakout – rallies $50 in one week
  5. Gold price finally breaks its 8 week trading range – so how much downside is left?

Link to this article: : http://www.goldmadesimplenews.com/gold/last-friday%e2%80%99s-gold-price-rally-following-through-this-week-7083/

Posted by on Jun 6 2012. Filed under Analysis, Gold News, Markets. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.
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