Gold rises higher while the price of oil drops

Published: 4 April, 2014 13:38

Trade gold - price increasePeople often turn to gold as a safe haven in times of economic turmoil, and recent developments have caused a spike in the price of this perennially popular commodity.

On Friday, a low US Non-Farm Payroll number and a flat unemployment rate caused stock prices to plummet, with the S&P 500, the Dow Jones and the Nasdaq 100 all taking a hit.

It appeared that people were taking refuge in gold, which saw its price rise above the $1,300 round figure.

As of yet, it’s too early to say if this is the start of a new uptrend for gold. Monday’s trading sessions saw a correction in which price began to head back down, but there is still plenty of bullish activity in the market. People who trade commodities online will likely find trading opportunities if bulls manage to lift the price to the current resistance level of $1,315. How the price behaves at this point will be a good indicator of the long term direction of gold. If bearish price action forms at this level of resistance, it might be signal that Friday’s upswing was only an anomaly, and traders can look for opportunities to place shorts. If on the other hand the resistance is broken strongly, it could be a good indication that an uptrend has begun, and traders will want to be ready with their longs.

This activity took place at the same time as the price of oil dropped to its lowest point since November, following news that Libyan rebels were reopening two oil ports in the east of the country. Commodity traders will want to pay attention to these fundamentals, because while gold is looking strong, at least for the time being, black gold could continue to make new lows in the near future.

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