Therefore sharp falls in the gold price might betray rising fundamental concerns and deteriorating market sentiment, or fear of an upcoming event. It is possible that the upcoming event dominating sentiment is the upcoming ISDA meeting, in twelve hours time, which will determine whether CDSs will be called upon to perform.
|With thanks to Kitco.com|
Gold acts as a safe haven during times of risk. The gold price has traditionally been a measure of global financial risk. In slamming down the gold price, sentiment can be buoyed. A falling gold price creates the perception that risk has abated, and that flight to safe havens is unnecessary.
Gold price volatility is likely to increase dramatically, according to Jim Sinclair, who forecasts moves of up to $400 in a day, superimposed upon an underlying general longer term bull market. Increasing global liquidity from quantitative easing programs, aligned with growing systemic risk and fearful sentiment, will fuel increasing gold price volatility.
And I thank Kitco, who might need to repair their software to account for leap years, unless it is an April Fool's Day joke, in which case the joke would be on me.