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    JM Bullion Weekly Market Review (2/14/14)

    Gold prices are trading sharply higher today to end the trading week. Gold is trading higher by nearly $20 per ounce as a weaker dollar index, lower crude oil prices and continuing economic uncertainty drive buying. Gold prices have been trending higher all week as speculation about the Fed’s ongoing tapering plans drives buying and emerging markets concerns remain in the background. This has also likely led to a fair amount of short covering in gold as well.

    Of particular interest to the gold bulls is the fact that gold holdings in gold ETF’s appear to have stabilized. Many have blamed rapid outflows in these funds last year for being at least partially responsible for gold’s large decline. The fact that some stabilization is now being seen after a year’s worth of declines is likely a bullish sign. Gold is also trending higher on the daily charts, and there are other signs of an improving outlook in the yellow metal. All things being considered it would certainly seem to point to the likelihood that gold is once again being looked at more favorably for allocation purposes and some investors are in the process of putting capital back to work in the precious metal.

    Another very encouraging sign for gold is the fact that the metal has now broken above its 200 day moving average. Overnight buying out of Asia drove gold above the $1311 level where this key moving average lies. The fact that gold is above this moving average will likely force more short covering and may also fuel fresh buying. Many investors look at the 200 day moving average as a key indicator and will look to buy if prices are above it and look to sell if prices are below it. If gold can maintain today’s gains over the next few sessions, we could possibly see even higher prices in the next week or two.

    Investors will continue to watch the dollar index closely as it approaches the 80 level. Any further signs of weakness in this index could also potentially fuel a further rise in gold and precious metals prices. Stocks have been up several days in a row, and are now starting to look a bit tired. Should weakness creep back into the equities market it may also potentially be positive for gold prices.

    Gold is looking a lot more positive currently as investors reallocate and new Fed Chairwoman Janet Yellen is seen as continuing the Fed’s current policies. If gold can stay above its 200 day moving average, we could potentially see sharply higher prices in a short period of time.

    Disclaimer: All Market Updates are provided as a third party analysis and do not necessarily reflect the explicit views of JM Bullion Inc. and should not be construed as financial advice.

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