Gold #10 – Gold as a Safe Haven
Excerpts below from a Market Watch article indicates that gold is back in vogue (this week anyway) as a safe haven for money. I was wondering when this was going to happen.
Gold futures rallied Friday, as traders recognized the metal's allure as a safe haven amid worsening credit market troubles that prompted a sell-off in global equity markets and a fresh injection of cash by several central banks.
"Suddenly, the world is realizing that gold is still a safe haven asset," said James Moore, metals analyst at TheBullionDesk.com. "We've seen pretty substantial losses in equity markets."
"I think this is genuine safe-haven buying," Moore said.
"You are starting to see some bargain-hunting buying coming here," said Charles Nedoss, gold analyst at the Peak Trading Group. "What the Fed did in terms of pumping liquidity into the markets is bullish for the metals. You're going to see some flight-to-quality type buying."
On Thursday, gold fell $13.50, or 2%, to close at $672.80, its weakest closing level since July 27.
"We saw the market sell off in a global liquid crunch as funds exited gold trades to meet cash margin requirements and to free up capital in general," said Zachary Oxman, senior trader at Wisdom Financial, in emailed comments. "This move was not in the direction of the primary trend and was, more than anything, a temporary move. The buying opportunities called yesterday and the day prior seemed to be ideal with gold now up $13."
"Fundamental factors that support this market continue to be unchanged, which is another reason why I feel that the gold moves of this week to the downside were nothing but short-term liquidity plays that will not hold," Oxman said.