Well, I think that a lot of people thought that after Ben Bernanke’s speech on Friday Gold was going to finally break through the $1,700 barrier. After all Ben basically said that the state of the U.S. economy is far from satisfactory and it was taken by most financial journalists as a signal that more Quantitative Easing (QE) will follow soon.
A new round of QE would, of course, be very positive for gold, especially if the Fed starts to get really serious will the amount of ‘easing’.
It is clear today that the $1,700 barrier is not going to be breached quite so easily. On the one hand this is a little disappointing – gold has been on the back foot for many months now and it would be nice to be able to get back into profit booking mode. On the other hand, the longer that gold remains on the back foot the greater the opportunity for accumulation, which will increase our eventual profits when the gold price finally gets into mania territory.
We are happy, therefore, to bide our time and stick to the program.