-- Posted Monday, 27 April 2009 | Digg This Article
| Source: GoldSeek.com
June Gold: Open= 915.0 High=919.7 Low=905.8 Last= 906.8 -7.3
The lead story today is the so-called swine flu. There currently is much misinformation about this flu strain that is affecting the markets. First being that this virus can be caught from eating pork and this erroneous belief has caused seven countries so-far to impose bans on pork from the United States (perhaps this is simply a cover for trade retaliations?). Front-month futures contracts for Lean Hogs were locked limit down today in response. The kicker, however, is that this particular virus strain, although called swine flu, has components in avian, human, and swine viruses, but has actually not been seen in pigs.
For the moment, the only reported deaths due to the virus have been in Mexico, and of those 150 only some can be contributing directly to the swine flu at this time. Until the number starts to plateau and deaths are not seen outside of Mexico, the market will remain on edge as the media whips up ‘pandemic’ fears. From a strict definition standpoint, this would be classified as an epidemic. Hopefully it stays that way.
The worries brought on by this virus swamped the markets with a deflationary tone and a mid-session rally managed to claw back some losses in many markets. Gold in particular was hampered with losses in commodities and a stronger dollar as capital fled the security of the US. Bulls will look to hold support around $900 an ounce over the next few days as the markets digest news about the swine flu.
Gold prices failed to break the downward sloping trend-line that demarcates the channel prices have been trading in. If prices can hold support then it appears the past two months have carved out an A-B correction, punctuated with a small double-bottom. Going into this weekend it appeared that gold might be ready to break out for an eventual test of $1,000 but the swine flu has perhaps spoiled the timing for now.
Bulls should continue to be patient and wait for prices to break the trend-line. It would appear that once this dust-up settles down that the news about GM dumping 21,000 jobs, and jettisoning Pontiac, plus the upcoming bank stress-tests, will weigh heavily upon the US dollar index. More aggressive trades could buy on weakness if the market pulls back to $900-887.
Review charts on these markets here www.britefutures.com. Remember that futures and options can be used for bullish or bearish positions; feel free to contact me to discuss trading strategies. Each contract/option = 100 ounces, a $1 move in a futures contract = $100.
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Thomas Hartmann
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-- Posted Monday, 27 April 2009 | Digg This Article | Source: GoldSeek.com
