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Monday, July 26, 2010

Why Isn't Gold Going Up in Price?

It's somewhat puzzling as to why the price of gold hasn't surged up again, as the economic news released over the last week should have pushed prices up.

There are several things are probably holding it back, and those are simply the usual summer period where suddenly things slow down for gold, which could be people acting like usual, no matter what the news.

Secondly, and possibly more important, is the so-called stress tests on European Union banks which gave the appearance of there being little in the way of risk there.

Finally, low inflation in the U.S. has investors abandoning gold for other investments.

This is even after the downgrade of Ireland debt last week and Ben Bernanke committing to print as much money as needed to prop up the U.S. economy if he has to.

Add to that the ongoing story of China slowing their overheated economy down, especially in regard to the urban property market, and the price of gold should be skyrocketing.

The conflicting events and stories have investors somewhat on the sidelines and unsure as to where it will all lead to; the reason for the drop in prices, but also why the prices are dropping precipitously, like some on the other side of the equation have predicted.

Investors seem to be holding their breath some to see what the economic narrative really is, and until they make a decision there, gold will continue in its current pattern of going up and down, with a slight gravitation to the down side.

Once it is understood the bank stress tests in the EU were dubious at best, we could see a rebound, although it could take the usual fall season to get investors interested again.

Today's spot gold price was at $1,185.20 at 12:26 PM EDT.

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