-- Posted Wednesday, 20 May 2009 | Digg This Article
| | Source: GoldSeek.com
June Gold: Open= 925.6 High= 941.0 Low= 925.3 Last= 939.2 +12.5
Gold bulls ought to be breathing a little easier today as the metal performed as would be expected given a steep decline in the dollar, higher energy prices, and fiscal concerns about the nation. The sharp sell-off in the dollar should start to gather more attention if the losses continue to mount, and commodities may well respond by moving higher to compensate.
Many traders have posited the idea that huge amounts of US spending will debase the dollar and thus will cause inflation when then the economy begins to recover. While so-called ‘green shoots’ are being whipped into positive signs of economic growth, the market has also ignored the many dead, crusty shoots still lingering. A correction in the equity markets could spur more losses in the US dollar index.
In terms of health of the dollar, the media has stayed fairly silent over the ramifications of unbridled government spending in just the past three months. More government debt has been piled up in the past 120 days than in the last 230 years. Well, the foreign exchange market has been paying attention, taking notes, and casting judgment.
Overall opinion is that the value of the dollar needs to be knocked down a few notches. As the panic and fear of this recession ebbs, the flight-to-quality buying in the US dollar wanes, as well. It is not only gross amounts of spending that sinks the dollar, but overall government policy that intervenes in business that has many worried about the potential ramifications.
Stepping back though, what really matters is that the trend in gold is now up. The downward trend was broken earlier this month and prudent trading requires following the trend. In addition, it’s been advised that long positions should sell out-of-the-money calls. The market could be subject to a lot of back-and-fill action as it grinds it way higher. The market is unlikely to ‘take off’ until prices get back over $1,000 and inflation, due to either consumer demand or a weakening dollar, grabs a foothold. Upside targets now lay at $948 and $964. Support comes in at $917 and then back at $912, and $902.
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.
To open an account and receive trading recommendations on gold futures or options contracts (also stock indices, energies, currencies, etc.), or to use our online paper trading service BriteTrak, contact me at tom@altavest.com. Visit www.altavest.com to request a Free Trading Kit. Keep in mind that there is risk of loss in all trading.
Thank you,
Thomas Hartmann
Altavest Worldwide Trading, Inc.
800 994 9566 x109
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-- Posted Wednesday, 20 May 2009 | Digg This Article | Source: GoldSeek.com
