A Bounce Back Morning for Precious Metals

Precious Metals Rebound, After Rough Day

After a slow day, with gold below the $800 mark for much of the trading, the precious metal has rebounded this morning pushing spot up to $814 at the time of this posting. Platinum bounced back big time, gaining over $25 to touch $1440 an ounce.

Silver too has seen a bit of a rebirth with spot rising above $15 and ounce. Palladium seems to be in a rut, probably due to expectations of surpluses for this industrial metal for 2007 and 2008.

Overall, I think investors will see several hills and valleys for Gold, Silver and Platinum over the next few months until the end of 2007. As the dollar slumps, or crude oil prices soften, gold and silver will surge. On days when the Dollar rallies against the Euro, expect to see some sell-off of gold. With Central Bank gold sales generally on the decline, it would seem clear that gold will hold at, or near these higher levels so long as demand remains as strong as it has been during the last few weeks.

One additional factor, which is growing in prominence, is the rising cost of health insurance and health care costs both to consumers and businesses. These pressures, unchecked by any government regulation or intervention at this time, are presenting themselves as a growing factor in the buying power of the US dollar and subsequent movement into the foothills of inflation. When inflation concerns are on the rise, demand for gold will follow suit. When inflation concerns lessen, crude oil and gold tend to have lower demand and softer prices.