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Long-term Uptrend In Gold Price is Safe
Pinnacle Digest writes: Gold inched its way back up in London trading early this morning, a sign the bottom may have been set in. It is believed, according to Adrian Ash at bullionvault.com, that the long-term uptrend in gold's price is safe, given that $1712 per ounce was never tested.
Despite Spain unveiling its newest budget cuts and Rome stating that it has no plans to receive a bail-out (although we know it likely will), the markets have managed to rally back this morning. And commodity prices have remained either solid or slightly up across the board.
This week in trading has been dominated by a stronger US dollar, but aside from oil, commodities look to have maintained their current upward trends.
Adrian Ash commented that “Yesterday's rebound off [2-week] lows suggests there are still players waiting to buy gold on the dips.”
It is strongly believed, across the precious metal market, that this correction in gold was a healthy one and to be expected. Keep in mind gold prices rose almost $200 per ounce in a 5 week period starting in August. A correction was natural.
Fundamentally, the data for gold points to higher prices. Ash states that “On the supply side today, Bloomberg News reports that 39% of gold mining output in South Africa – the world's former #1 producer – has been closed after fresh wildcat strikes hit gold majors AngloGold and Goldfields.”
“The world's third largest gold mining firm, Anglo has now suspended at all of its South African operations according to the Independent Online.”
Albert Wocke, associate professor at University of Pretoria’s Gordon Institute of Business Science believes that the mining industry in South Africa is severely damaged from the recent round of strikes and its regulatory regime is unpredictable.
An unreliable workforce and regulatory regime is enough to destroy an entire country’s mining industry. Hopefully that isn’t the case for South Africa, a country who desperately needs the industry for GDP growth. Nevertheless, the uncertainty surrounding this mining powerhouse country is helping precious metal prices as there are several world-class gold and platinum mines in the country.
Click here to read Adrian Ash’s complete report.