Gold continues to fall in Asian trading: Next stop $750?

Posted August 14, 2008

Two days ago, we predicted gold would drop below $800. It did, in early Asian trading…

by J. Christoph Amberger

Baltimore — (TFN): Gold futures may have closed Thursday’s trading with a loss of just $17 an ounce to close at $814.50. But in early Asian trading, gold for immediate delivery continued to plunge by as much as $17.15, to $789.47 an ounce—the lowest since Dec. 17.

Immediate-delivery silver experienced a further 12.1 percent rout to $12.46, the lowest since Sept. 14.

The U.S. dollar, conversely, climbed to a 5 1/2-month high versus the euro at $1.4762, the strongest since Feb. 21. Not surprising, considering eurozone GDP growth in Q2 contracted by 0.2 percent and Germany, Europe’s largest economy, announced its GDP had shrunk by 0.5 percent. France and Italy experienced declines of 0.3 percent.

Economic stagnation in Europe was not a good enough reason for the reason NOT to rise against the dollar since 2001. (U.S. analysts, financial editors and politicians typically wear rose-colored glasses when it comes to Europe…) But maybe we are now seeing the beginnings of the great decennial cyclical downturn, during which the rising dollar and dropping commodities may cajole each other into divergent trends.

By the way, we did predict gold’s fall below $800 just two days ago. Prepare for gold’s next stop at $750 by next week.

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