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Gold prices rose sharply Tuesday, and then fell equally dramatically. The rise reflected investor concerns about the state of global and national economies as well as political developments in Hong Kong, Washington, and elsewhere. The price decline illustrated the speed at which investors will sell gold on better economic news: In this instance higher U.S. inflation and a not-unexpected announcement by the U.S. government that it would delay its most recently threatened tariffs on Chinese products.
Gold prices now are moving strength to strength, with new waves of short-term buying in futures, forwards, options, and ETFs on most price dips. Longer term investors still have not joined the buying spree, nervous about a false start in rising gold prices. Given this shift in the gold price dynamics, based on the plethora of economic and political risks abroad in the world, investors should plan to be long gold, buying on dips and, if they so choose, taking profits on spikes.
Note: Discretion should be allowed at +/- $0.50 from the target.