Sunshine Profits

Tensions in the Middle East have always had an impact on everyday life around the world through their effect on the price of oil. During the last month we saw this impact very clearly.

In the previous week the Fed surprised markets when it decided to stick with its massive stimulus measures

Last week the price of silver climbed to $23.45 after U.S. Federal Reserve Chairman said its huge stimulus program would stay in place.

According to Reuters, gold is often seen as an inflation hedge (while it is really a system hedge in our opinion) and this safe-haven investment, has fallen nearly 20% this year on fears of an end to easy central bank money, which had propelled it to record highs in 2011.

In my previous article (What if the Fed Really Tapers QE?) I focused on what would be the likely outcome of limiting the QE program on several key markets (gold, real estate, stocks and bonds). Today, we will provide you with an analogous analysis for a completely different scenario.

Today, gold in the global market reversed early gains and fell to its lowest in more than a month as U.S. futures extended losses on fears the United States would curb its stimulus soon and as a U.S. strike on Syria looked less likely.

In our previous Oil Update we examined major factors, which previously fueled the price of light crude. Before we move on to the technical part of our Oil Update, let’s take a closer look at the events of the previous week.

Last week gold rose to its highest level since mid-May as possible military action against Syria prompted safe-haven buying.

Yesterday, gold stopped a five-day rally that had pushed it to its highest since mid-May, and lost some of its safe-haven appeal as the chance of imminent U.S. military strikes against Syria seemed to diminish, and investors booked profits.

It seems that everybody is talking about the yellow metal and wondering where will the next local top form.