Expert predicts continued volatility in the gold market throughout 2012

Yang Tien-li, vice manager with Bank of Taiwan's precious metal department, made the remarks after gold closed last Friday in New York at US$1,740.3 an ounce. While the metal closed last week higher, it declined on Friday by the biggest margin since the end of December on better-than-expected employment figures in the United States.

According to the U.S. Department of Labor, January employment in the non-agricultural sector rose 243,000, and the unemployment rate fell to 8.3 percent. The numbers sent Wall Street sharply higher on Friday.

Yang said that gold price had risen US$241 from Dec. 29 to Feb. 2, a margin of 15.8 percent.

“The market for gold has been overheating,” Yang said. “The decline on Friday was a technical correction.”

He warned that gold had risen from a low of US$1,308 at the beginning of last year to a high of US$1,920 on Sept. 6, a difference of over US$600 and fluctuation rate of 47 percent.

“Volatility will continue to set the trend this year,” he said. “Investors are urged to buy in separate installments as a way to diversify risk.”

According to him, for now, investors should not blindly chase prices, which are still subject to downward pressure.

Instead, they should first observe whether prices will find support at the US$1,670 to US$1,700 level, he said.

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