The key target for Gold at the beginning of 2008 was the all time high from 1980 at around $850 an ounce. The market had already had a go at it in November 2007 and failed to breach it prompting a drift back to the $770 area. It didn’t take very long as it broke straight through the key $850 area on the first trading day of 2008. This prompted a rapid move up to $915, before a bull trap drop back to $849 later in the month. This, in turn, led to an assault on the $1000 mark. The high of $1032.50 was reached on 17th March but significantly the market was unable to hold onto the gains above $1000. At around the same time the USD Index was posting a significant reversal which seemed to indicate that a change in sentiment was on the cards. It is generally accepted that the most dangerous time to buy is when everyone is bullish and talking of progressively higher targets - $2000 an ounce was a figure being bandied about with abandon at the time. This seems a long way away right now and in the very long term it may well be achievable but it will need to get past the significant level of $1000 to do it. The move back to $680 in the latter part of last year was notable for the fact that it was the smallest fall of all the precious metals though it will have still worried the Gold bulls. Gold has undoubtedly benefited from its status as a safe haven, at the expense of the dollar, but even moreso against Sterling where it continues to make new highs. The high so far has been £611.25 an ounce. The charts suggest a correction is overdue though, and a move back to £541.00 could be on the cards in the short term. It is interesting to note that Platinum has risen 33% off its October lows in the past few days close to $1000 an ounce, as has Silver which is around $11.40. Gold on the other hand is only 27% off its October lows. As a leading indicator this could be significant as Platinum does have a tendency to lead moves in the precious metals sector. There does appear to have been a shift in sentiment on commodities in the past few days, as both the GSCI (Goldman Sachs Commodity Index) and Reuters CRB appear to have found short term bases at 307.80 and 208.50 respectively. If these hold and metals prices start to recover then we could see a very rapid rise in metal prices as short-covering kicks in. While the dollar remains under pressure, the Gold price should remain fairly well supported as they tend to closely correlate with each other. As a hedge against Sterling declines Gold has also done quite well. If Sterling continues to remain weak then further gains could be seen.

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