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Gold Bullion on Jobs, Correction

June 4, 2012 - Gold bullion is under a lot of pressure from both sides as it attempts to cope with the correctional stage that has brought gold 20% off recent highs and the influence of crisis in other markets, which is creating strong demand. The current demand is the kind of investor demand we saw at the beginning of the Greek sovereign debt crisis two years ago, now considered a veritable exodus to precious metals and tangible assets.

The recent US jobless report showed a dismal addition to the US economy of 69,000 jobs, per the monthly report from the US Bureau of Labor Statistics. Just three months ago, in February, 200,000 jobs were added to the US economy, which caused the optimism of the brought US financial stocks to eight-month highs.

The kind of numbers were seeing now from the US Bureau of Labor Statistics are enough to cause the strong negative sentiments about the future of the US economy and create an impetus to safe haven asset status inherent in gold bullion that sways the numbers.

It should be remembered that we are currently in a correctional stage for gold and all precious metals. Though we have recently seen 20% off from highs, it is not unusual in an 11-year bull market that has at times seem hundred 600% returns. Nor is there any reason to consider the correctional stage over, even though were having a strong increase in price, back over the $1600 per Troy ounce level, based on the surge in demand.

The real support for gold was around $1555 per troy ounce, but it may be some time before we see that level tested again. Particularly, if the situation in Europe gets worse there will be a further influence on the gold market. Gold above $1600 per troy ounce is a wonderful thing, but it is confusing if the investor involved doesn’t have a far eye looking at the overall trends of the gold market over many months.

There is every indication that there will be some type of further problem in Europe, though nobody really knows what, and until we see solid and concrete progress in the US economy it should be assumed that very little progress is being made. This is a logical and theoretical buying opportunity for gold, but the short term price dynamics may dissuade some people from the gold market, given its complexity. Regardless, gold bullion is coping with simultaneous and counteractive directional forces that will influence the market for some time.

Daily Updates Archive

Jonathan Monroe

Senior Staff Writer -

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