Gold Investments Market Update

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The President of the Federal Reserve Bank of New York, Timothy Geithner, said that some banks had moved from being too willing to take on risks to being reluctant to take any chance of losing money, a move that was making the crisis worse.

FX Commentary

With investors and traders alike shunning risk in favour of the tangibility of commodities and the security of not being long the dollar, FX market volatility abounds. Carry trades are being unwound apace with the Japanese yen and the Swiss franc being the main beneficiaries with the yen rallying against the dollar to levels not seen since the end of 2004.

The main story though is the persistent dollar weakness. The greenback is falling daily to record lows against the euro and while the ECB are concerned about the absolute level they have one eye firmly fixed on inflation and as a result will be handcuffed from using monetary policy to relieve the pressure on the single currency. The Fed on the other hand appear to be letting the dollar fall on the sword in order to stave off a recession. These two factors will surely see the dollar continue to fall and fall hard. As the legendary Commodities Investor, Jim Rogers said recently with respect to the fall in the dollar; "You ain't seen nothing yet!"

While commodities are marginally off their recent highs, commodity currencies are still performing well. The Australian, New Zealand and Canadian dollars still remain at their elevated levels against the U.S. dollar, however sentiment toward the South African rand remains very negative as it hovers around the 8.0000 level against the Greenback.

Support and Resistance

Short term support is now at $950 below that at $930 and $915. Strong support in gold is now seen at $890 to $900. The $1000 price level remains a realistic short term price target and $1,200 remains a realistic possibility in the coming weeks.