Gold Suffers Setback
October 23, 2007
Big Correction in Gold!
Seems speculative investment has pushed Oil and Gold up above what may be reasonable market levels for current circumstances. UBS called it right, suggesting investors consider profit taking early Monday in the face of peaked markets and imminent corrections. A nearly $20 drop in Gold spot price brought the precious metal below the $750 bench mark before a slight resurge pushed it back above $750 later in the day.
Perceived weakness in the U.S. economy due in part to looming sub-prime loan defaults, casts a shadow over the ability of Oil to continue it's rise. Last week crude topper $90 a barrel, but it slipped back today to about $87, pulling Gold and the Euro along for the correction. At the moment most analysts see these as short-term corrections. Many are still anticipating higher long term levels for both of these precious commodities, however, investors should keep in mind that the U.S. buys about one quarter of the worlds oil and a weakening economy would have far reaching effects.
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