Gold is shining once more.

With stocks climbing to new highs and potentially drawing fresh money into the equity market, the classic gold-bug argument that the dollar will weaken and only gold can truly store value is being severely questioned. The U.S. Dollar Index is nearly at a one-year high and the CBOE Volatility Index is back at levels that discount any concern about the markets, which is another strike against safe-haven assets like gold.

However, despite all that’s happened to gold of late, the precious metal has managed to hold its own, falling only slightly below the key $1,300 per ounce level, and looking to finish August close to flat.

According to one analyst, "The resiliency in gold has been tremendous. The bears tried hard to sell it but they have not been victorious." Owning gold is back in favor now after being knocked down several times; it seems that nothing can keep it down.

Prices Pumped Up

Others believe that gold prices have been propped up by concerns emanating from Ukraine and Iraq, but that the picture otherwise looks bleaker than some think. Some financiers argue that the downside for gold could be limited, given that there are not many who are interested in shorting an asset that could zoom higher if those tense situations heat up.

Albert Ng of Aurum Options Strategies says that we “are not seeing any accumulation of longs or shorts…-maybe that's why we're not seeing large downward movement." said. He added that some producers are looking at costs of about $1,200 per ounce for gold, and that it would be difficult for gold prices to fall too much below that level.

Ng says that there are few reasons for gold to move out of its recent price range of$1,280 to $1,320. And for some analysts who are long gold futures as well as shares of gold miners, this tight price range is actually a bullish sign and that investors should anticipate a rise in gold prices.

Gold mutual fund managers have been encouraging investors to stay away from individual gold stocks or gold bullion and to play it safe by investing in gold through a mutual fund or a gold EFT. Hedge funds have raised their bets on gold prices when Fed Chairman Ben Bernanke encouraged sustained economic stimulus for the foreseeable future. By the end of the second quarter of 2014, U.S.-listed gold ETFs had recorded $20.5 billion in asset outflows, according to data from S&P Capital IQ.

Related Articles
  1. Investing

    The Science of Making Better Investment Decisions

    Neuroeconomics attempts to bridge neuroscience, cognitive psychology and economics in order to understand the mechanisms underlying economic decision making.
  2. Professionals

    Data Integrity Analyst: Job Description & Average Salary

    Learn about the average salary of a data integrity analyst and the required skills, education and previous experience needed to fill this role.
  3. Stock Analysis

    Roche Stock: A Dividend Analysis

    Learn about Roche's financial strength via an examination of its financial statements, and discover the security of the company's annual dividend going forward.
  4. Mutual Funds & ETFs

    3 ETFs to Consider Before an Interest Rate Hike

    Learn about potential impacts of the Federal Reserve boosting interest rates and three ETFs that can help you capitalize on the perceived December increase.
  5. Retirement

    The Best Strategies to Maximize Your 401(k)

    Use these tips to watch your retirement nest egg grow from quarter to quarter.
  6. Stock Analysis

    3 of America's Most Expensive Drugs and Who Profits From Them

    Learn about orphan drugs that are some of the most expensive drugs in America. Read about the companies that manufacture these drugs.
  7. Stock Analysis

    The Top 5 Apple Shareholders

    Learn about insiders and institutional investors with large positions in Apple. Read about Carl Icahn's activist campaign against Apple.
  8. Stock Analysis

    UPS Vs. FedEx: Comparing Business Models and Strategies

    Investigate the different business models and strategies for UPS and FedEx, two companies that seemingly compete for the same delivery business.
  9. Professionals

    Common Interview Questions for Commercial Real Estate Agents

    Identify some of the common questions asked at commercial real estate agent job interviews, and learn how to formulate winning answers.
  10. Stock Analysis

    Amazon's 3 Key Financial Ratios

    Get insights into the important financial ratios behind the Amazon growth story, and understand the implications as the ratios move one direction or the other.
  1. Why are most airplane tickets nonrefundable?

    Airplane tickets are generally nonrefundable, because the majority of tickets sold are discount tickets. In exchange for ... Read Full Answer >>
  2. Is North Korea a developed country?

    North Korea is one of the poorest and least developed countries in the world. It is far from a developed country. Because ... Read Full Answer >>
  3. Does Netspend accept wire transfers?

    NetSpend accepts some types of wire transfers to add money to the prepaid debit cards it issues to its customers. There are ... Read Full Answer >>
  4. Is Mexico a developed country?

    As of 2015, Mexico is not a developed country. However, it beats the majority of its peers in the developing world on most ... Read Full Answer >>
  5. Is China a developed country?

    Despite having the world's second-largest economy and third-largest military, China is still, as of 2015, not classified ... Read Full Answer >>
  6. Do FHA loans require escrow accounts?

    Federal Housing Administration (FHA) loans require escrow accounts for property taxes, homeowners insurance and mortgage ... Read Full Answer >>

You May Also Like

Trading Center