Existential gold investors appear to be finding their way as of late,
as the gold metal seems to have formed a base around $1,640 an ounce,
UBS’ Edel Tully explained. While the yellow metal is looking for fresh
catalysts to fuel the next leg in what has been an 11-year rally,
medium-term prospects appear bullish.
Gold was coming off a two-day rally to recover from steep losses
suffered on Tuesday, when it fell more than 2%. By 11:39 AM in New
York, the yellow metal was trading up 0.2% or $3.00 to $1,655 an ounce.
In choppy trading, gold has lost part of its “safe haven” luster in
recent breakdowns, seemingly behaving more like a commodity than a
currency.
But investor sentiment indicates underlying fundamentals are solid.
On Friday, Morgan Stanley raised its 2012 bullion forecast 35% to $2,200
on continued support from macroeconomic uncertainty.
Tully, who recognized market activity in
gold was characterized by uncertainty this week, noted choppy
rangebound
trading was another reason to believe a floor was forming that could
provide price support for the yellow metal.
Along with higher than average demand for physical metal, gold’s
recent move to the upside, along with its attempt to breach the 100-day
moving average, are bullish signs.
The environment “lacks fresh catalysts,” explains Tully. Once
investors find their way, it seems, gold will resume its upward trend.