GOLD TRENDS third support level of US$1650 an ounce by touching US$1628 an ounce on September 23, 2011. It opened today at US$1650 an ounce an

Gold has broken its third support level of US$1650 an ounce by touching US$1628 an ounce
on September 23, 2011. It opened today at US$1650 an ounce and is hovering at US$1597 an
ounce. This decline has been brought about by the rise in dollar against a basket of
currencies, the efforts by European leaders to come up with new ways to resolve the debt
issue and the decision by the Fed to replace short term debt to long term bonds. Moreover,
the fear of global recession has caused investors to sell their metal holdings and realize
whatever gains they can and as fast as they can.
We expect the metal to touch US$1475 an ounce in the short term and go further beyond
this level if investors continue to invest in dollar and divest from gold.
However, this decline is expected to reverse by the end of December 2011 as we should not
forget that the US debt is still lingering, the Euro zone debt crisis is still unresolved,
unemployment is not declining and growth is decelerating in the large world economies.
Moreover, a quantitative leasing‐3 is expected in 2012 which would support gold causing it to
once again become an investment haven.
It is also very likely that investors start buying the precious metal at these low prices,
resulting in an increase in demand for bullion and subsequently raising prices.