Euro Gold chart

Once again gold is getting a very firm bid even as weakness appears in the broader US equity markets. News out of Europe continues to leave traders unimpressed as once again those various nations prove why the idea of creating a single monetary union and a single political union out of a group of such disparate countries cannot ever hope to succeed.The differences between the nations of the north and the nations of the south cannot be more stark.

Quite frankly, those citizens of the countries that are on relatively solid financial footing are rightfully indignant that their wealth should be used to prop up those countries whose political leaders spent their own country into ruin. The situation would be akin to US taxpayer dollars being sent to prop up Mexico.

One outcome of this is fear - fear that the cracks in the monetary union are going to worsen. This is leading to selling in the Euro. What it is also doing is driving money on the Continent into gold.

Take a look at the following Euro-gold chart and note how relatively firm it continues to trade. It is currently about 120 euros off its all time high and is on track for a very firm weekly performance.

If you also note, the price accelerated quite sharply beginning in late June/early July and moved up out of the price channel that for the most part has defined its trend going back into the bottom it made in late 2008. This is what happened to US dollar-priced gold which got ahead of itself somewhat before correcting and spinning off some froth out of the market.

Let's see how this closes for this week to see whether or not it can strongly surpass the 1260 level. Ideally the market would begin another price channel with a base at a elevated level and not one of those nearly vertical rocket shots which are not sustainable and tend to run out of steam and then give back most of the gains.