It still has a big hurdle to clear if it is going to get any fireworks going and that hurdle remains the same as it has been for some time now, namely the region up near $1680.
It seems that Central Bank buying below the market has shored up support on the chart.
One gets the impression that the gold market simply does not believe that the Bernanke-led Fed is going to be able to avoid doing another round of QE.
Dan,
ReplyDeleteI appreciate the insights you share here and on your KWN interviews. I trade gold using cycles, and the current framework is such that we should see gold rise for several weeks. The bullish reversal we saw on Wednesday should mark significant lows for these markets. Likewise, the dollar is about to produce a failed daily cycle, which is the hallmark of a trend change. Cycles suggest a downtrend for the dollar into late June... just when Operation Twist is ending.
I agree, gold appears to have made some type of low in here.
ReplyDeleteAnd for the first time, the CRB Index actually turned up off the lows and made a higher low than October or December.
Maybe Bernanke has decided that the threat of deflation was getting too close, so now he's got the Algos chasing the "meatball" again putting a small bid into commodities.
But of course, he will only let the commodities rise up to a certain level, then he will utter some "words" to put abject fear and terror into the COMEX and NYMEX, and we will see yet another huge bid into U.S. Treasuries, any inflation expectations will be quashed, stocks will sell off, etc.
Only for awhile, then ultra-low interest rates will once again re-invigorate the "Animal Spirits" again, stocks will turn around, and the Algos will once again start chasing Amazon, Expedia, eBay, etc. at the expense of anything connected to the resource or "hard asset" universe.
Bernanke has successfully engineered a "Wash, Rinse, Repeat" cycle which has now takes place over months, not years, because of the effectiveness of his meatball strategy.
And here's the shocker. So far, he's only using "words", he has yet to suggest margin hikes, price controls, or threats of interest rate hikes to control inflation, he always has those tricks in his back pocket.
As I have repeated before, I've never seen a market mastered like this by a Fed Chair, he puts Greenspan to shame.
If "fundamentals" really mattered, Gold should be at $3,500 and Newmont Mining and Goldcorp should be trading at $400 - $600/share instead of Apple and Chipotle during the worst recession in 75 years.