Gold…where to?!

Precious metals continue to incline rapidly amid concerns and worries from jewelers that demand will eventually fall due to the recent spike in prices. This has now been evident in all countries that usually demand large amounts of the yellow metal at this time of year. The question is though, who is currently purchasing gold if consumer behavior has now been altered and demand waned significantly?

The retreat in demand, change in consumer behavior, alternative income sources and high unemployment rates are what make the global economy unique at a time the economy has slipped into the worst recession since WWII.

Gold inclined yesterday to end trading in New York at 1017.30 dollar per ounce as it was up 1.00% after reaching a high at 1021.80 dollars per ounce, nearing the historical high last year at 1032.70 which was witnessed in March 2008. Looking at platinum, it too rose during yesterday's trading to hit a high of 1355.00 dollars per ounce before ending trading in New York at 1345.00 dollars per ounce showing a 1.59% incline. Silver is still surging after ending yesterday's trading at 17.40 dollars per ounce recording a 2.29% incline after reaching 17.50 dollars per ounce.

The spike in precious metals included buying saturation on silver and massive demand by spot traders on platinum yet the incline in gold came as a surprise as demand for the safe haven rose after purchasing power slumped. In other words, investors are targeting gold as a hedge against inflation.

Inflation data that was released yesterday from the US was worrisome despite prices eased 1.5% in the year ending August, it rose on the monthly basis topping median expectations as it was reported at 0.4% adding more concern that inflation may continue to rise in the medium and long term.

Fed Chairman Ben Bernanke stated that the US economy may have reached a bottom to the recession whereas data from Japan and the Euro Zone show that the economies are still battling a recession where central banks may not be able to hike rates and halt stimulus plans until stability is evident in the economy with lower unemployment and solid grounds for sectors to improve. The continuous stimulus plans and pumping of liquidity into the markets could result in rather high inflation rates.

Commodity indices rose once again as the S&P GSCI surged 10.28 points to reach 473.00 as the index nears this year's recorded high. Crude oil also found its way to the upside whereas the dollar is depreciating in the markets which add more worries concerning the purchasing power at a time of high unemployment rates.

All these factors alongside fundamentals released today from Asia resulting in an incline in precious metal prices where gold is now near 1023.00 while silver is at 17.60 and platinum is trading around 1347 dollars per ounce.

Silver has inclined the most in the recent period as demand has shifted gradually from the yellow metal to silver on higher spot transactions and speculations that manufacturing and industrial demand in the future will pick up.

We had previously stated dear reader that all the current economic developments, no matter the alterations, are helping precious metals continue the uptrend as far as interest rates across the globe remain at record lows. We still see the possibility for further inclines on the medium term yet we may witness volatile trading during normal trading as it may be disturbed my profit taking transactions which shouldn't quite affect the general trend for the metals.