Gold has steered clear of that dangerous $1600 an oz support zone which has been causing those investors bullish about the metal so much anxiety. Now trading around $1650, the fear seems to have gone from the market and we expect a period of consolidation before any upward momentum becomes apparent.
Of course that will depend on Ben Bernanke not spouting more gibberish while continuing with the inflationary policies that he, the politicians from Obama downwards, central bankers and the media in general believe so many of us are too stupid to recognise. Fortunately his efforts to strike terror into the hearts of gold bulls are beginning to get the short thrift, and the short term price reaction, that his statements deserve. On the credit side it makes a good time to add to your gold bank whenever he creates such a reaction. I think we can now safely say that the evidence indicates that gold is holding off the bears
The Long Term Up Trend Is Still In Place
Although gold has quite away to go to reach it its 200 day moving average around $1687 the long term up trend is still in place, we just have to be patient. Good signs are that the strike by Indian jewellers is over and that bullion sales are picking up ahead of the wedding season and this months’ festival. The poor US jobs figures may prompt another round of quantitative easing despite the publication of the minutes of the Federal Open Market Committee being interpreted as unlikely at the present time.
The Euro zone problems, as most investors who were not suckered in by the media and ECB mouthpieces, realised was not “fixed” and the temporary optimism is rapidly waning as realism sets in. All this and more translates as more work for the money printing presses and that will be good for gold.
Gold, The Most Volatile Market
The downside this week is that the net long position of speculative gold futures and option traders on Comex is down again, that is the difference between the bullish contracts and the bearish contracts last week is off by 6.5%. so there is some evidence of optimism evaporating amongst the speculators that gold will resume its upward path in the near future.
This does not detract from our opinion that a floor has been reached and to reiterate that consolidation around $1650 is in place, option trading and the futures market are very much short term gambling markets, with gold being one of the most speculative and volatile markets of all.