Gold likely to be stronger than other commodities in 2012

Gold was the winner in the global market of widely traded commodities this year and is likely to be stronger than other commodities in 2012.

The yellow metal was a clear winner, given its safe haven status and heightened risk aversion of global market players. As the risk of a European debt crisis continues to loom over the global economy, gold and the US dollar can turn into the investment of choice. Silver is used as a commodity but is also treated as money, competing with fiat currencies. This dual status of the white metal can help it rally in times of crisis and follow gold. Let us look at the individual commodities to see what they look like for the coming year.

Gold: The metal has fallen substantially during the second part of the year, but is the only commodity in our group that is strongly positive for the year. Gold had closed near the $1,450-level in December 2010 and at the time of writing this article, it was trading at the $1,550-level. A panic in the market can send gold rallying again. For now, the charts say the precious metal can go all the way down to $1,450-1,485 before catching a bounce. If gold falls below that, it has a few support levels to clear, which include $1,350, $1,200 and $1,100. At present, the trading range is between $1,450 and $1,950.

Silver: The white metal has a history of following gold and being extremely volatile. Five per cent moves a day are not unheard of. Hence, it’s prudent to be not aggressive when trading in silver. For the year, it posted a negative return. On December 31, 2010, silver closed at the $31.5 range and at the time of writing this, the price was $27.05. The correction in the price was inevitable this year, given its huge rally since early 2010 of about 230 per cent.

The white metal is now near an area of support of $26 and could catch a multi-month correction or even a reversal. If it falls below $26, it could go all the way down to $21, a key level. When silver sold off in the 2008 crash, it fell almost 58 per cent. A similar percentage fall now could take it down to the $21 level. On the other hand, a rally from the $26 level can take silver to $35 and a breakout of that level can push prices up to $45. – Business Standard

Tags: Gold analysis, Gold future prices, Gold futures, Gold investment, Gold news, Gold price, gold price 2012, gold price forecast, Gold prices

Posted by admin on Jan 2 2012. Filed under Gold predictions. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry