Last week saw gold hit new highs early in the week and I speculated that fear was driving the market and prices would correct when the debt deal for Greece was announced. As last week went on I had to back-track on that position as gold not only held higher ground but managed small advances.
Looking again at the technicals, I still think gold and silver are over-bought at these levels, but not wildly so. In yesterday’s Kitco gold survey analysts were similarly divided with eight seeing prices up next week to 11 saying prices would move lower.
Price support for gold comes from continued demand in Europe in spite of the deal announced on Thursday by European finance ministers. The Euro-zone debt deal is not doing much to calm investor fears or bolster faith in the euro.
Another contributing factor to gold’s advance and price stability is continued strong demand from Asian markets, particularly India and China.
The debt crisis in Europe was amplified by a breakdown in the debt ceiling negotiations in Congress. Markets are now seriously considering previously unthinkable that the United States of America could be forced into self-inflicted default. That possibility didn’t really hit home for most until Friday afternoon when Republican leadership walked out of negotiations on the debt deal. Another meeting on Saturday broke up after just an hour.