If the market can stay above $1300 as it heads into European trading, but especially New York trading, then we should get some further short covering and actually begin to see some fresh money begin flowing back into the metal. That will be the big test for gold.
Lots of ifs and buts, but if the HUI can close that chart gap and push past 245 then we will have the both cylinders firing at the same time.
One thing I am also noticing is that the price of crude oil is remaining stubbornly high. While food prices are moving lower across the futures markets, the energy sector refuses to break down. If anything, it is escalating higher. It is difficult to see how crude prices could stay this strong given the anemic nature of the economy but other supply-side factors are at work in that market which are keeping a firm bid in it thus far.
A higher crude oil price can be ignored as an inflation factor if players see it as more of a short-term, news driven feature rather than more lasting set of changes in the fundamentals. If the thinking begins to shift and traders see the higher crude oil price as something that is going to stick around longer than initially expected, some might start anticipating a cost push factor from higher energy inputs.
If that becomes the case, we should see some impact on the bond market. As of now, bonds are up even in the face of the higher crude with the thinking being that it will act as more of drag/tax on the economy rather than heating up any inflation push.
Awesome, analysis , Dan. Thank you for the insight.
ReplyDeletecrude fundamentals suck raw eggs and I have been wrong for a month now, so we shall see how much higher they can goose things; agree with your pm sentiments as it looks to be an interesting week ahead; steve in sparks
ReplyDeleteThanks a lot Dan for such reacivity.
ReplyDeleteI didn't read this in any book but I'd like to see 1325 hold as a resistance for a little while.
Because 1325 $ is the first 23% retracement fibonacci level of the 1805-1175 correction.
That would indicate that the psychology of the market is watching now 1805-1175 as the final bottom, and is starting to take into consideration the associated fibo levels.
On the contrary, if we go straight towards 1348 and bounce down, it feels more that we are still in the retracements of the 750-1950, and then maybe back to re-test the lows.
Well, I don't know if all that makes much sense lol :) but anyhow, to me, if we first bounce on 1325, and then later on get through it, there is a higher chance that prices will then target and reach the next fibo levels than if we go straight to 1348 and bounce down.
Let's wait and see :)
Thanks Dan for this informative post, as always.
DeleteHubert, thanks as well for your interesting update.
Do you maintain any blog or so, or can we count on you continuing posting in Dan's comments section?
Because I would find it interesting to stay updated with your thoughts.
Hi Opzeeland,
DeleteI'm participating sometimes to a few other blogs but most are in french.
I'm not maintaining a blog, because :
- it is a commitment to post regular updates, and my activity doesn't allow it. Hats off to Dan to have his own blog and to make those weekly interviews with KWN, no matter what. It's a huge job.
- opening a blog gives you a kind of ascendency to your readers, and you'd better justify it. There again, I don't have Dan's experience to put myself forward and gather a "crowd" of followers. I prefer to be a member and paticipate freely. In case I write a blunder, Dan can correct me :)
So, I don't feel that I have neither the time to commit on a regular basis nor the necessary experience to open my blog, and I think it's better like this :) Especially, this blog is quite open and allows interaction between its members, so, we can make the most of it.
gold and silver off to the races from now or ....??!!
ReplyDeleteA break or head fake?
Delete