Investing in Gold, My Thoughts on October’s Price Action

As we enter the morning session, traders are being asked to digest an announcement by Citigroup [[C]] that third-quarter earnings are likely to decline by up to 60 percent. I think the announcement may drive traders to expect similarly poor earnings results from other financial firms. There may be a fair amount of profit taking as news of Citigroups announcement and analysis of the potential impact spreads throughout the day.

Due to general market volatility, I still believe we may be due for a minor correction to $710-$720 levels for spot price of gold. A pending rate cut at the end of October has kept gold strong and weakened the dollar. If we pass $750 today, we may enter a smooth uptrend for the spot price of gold. It will be important to watch the closing levels of gold in October to determine a likely direction for gold during the remainder of the year.

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