Gold Rallies Above $1,400 In Quiet Half-Day

Trading was light, but that didn't stop gold from rallying above $1,400 with only two pullbacks. Reaching as high as $1,409.60, the metal ended up sporting a strong double-digit gain. (Due to the holiday, Stockcharts.com doesn't have the six-month charts I normally copy for this report.) As of the end of the truncated session, the spot price was $1,406.60 for a gain of $16.90 since Friday's close. The Kitco Gold Index attributed +$18.75 to predominant buying and -$1.25 to strengthening of the greenback.

A Reuters report gave essentially the same reason for gold's rise as did the morning reports: turmoil in the Middle East and north Africa.

"The unrest and the fear in these countries is increasing," said Bayram Dincer, an analyst at LGT Capital Management in Switzerland. "These uncertainties on the geopolitical risk side are driving the gold market."

"See how easily gold broke $1,390, $1,395, which were strong resistance levels, and now the $1,400 psychological level," he said. "It seems nobody is looking for lower gold prices."

The article also said that gold in terms of euros is rising as well; it's now well above €1000 and approaching €1,030.

The U.S. Dollar Index, unlike gold, had a quiet day with little fluctuation. After inching up to as high as 77.81, it pulled back in late morning and muddled between 77.65 and 77.71. As of 5:30, it was at 77.70.

Since the day was shortened and trading light, not too much should be read into today's rally unless it's endorsed during full trading tomorrow. Still, breaking above $1,400 and staying there is an achievement for a rally that seems to be going nowhere but higher. Although it was common currency to believe that gold would still be hammered by the recovery trade only three weeks ago, that belief now seem like old news. There may be a pullback in overnight trading, but $1,400 may still hold. If so, then more and more eyes are going to be on $1,425.