-- Posted Tuesday, 26 May 2009 | Digg This Article
| | Source: GoldSeek.com
June Gold: Open= 957.6 High= 960.1 Low= 960.1 Last= -6.0
If the median price of homes is indication of the health of the economy, then this nation is in for more trouble, as year-on-year home prices are down 18.7% and month-on-month prices dropped 2.2%. Each worse than expected.
However, if consumer confidence is a good indicator of economic sentiment, then this nation should prepare for a possible rebound, as the index spiked last month, rising from 40.8 to 54.9, making it the largest month-to-month move in six years.
The markets apparently brushed aside the home sales report to embrace the consumer confidence figures, and perhaps with just cause. The housing market will eventually stabilize. The housing starts figure from last week certainly hammered home the point that there are two sides of the commodity equation, supply and demand, and falling demand can be fought with falling supply. There are a lot of consumers living in the US that do not own homes and their money is just as important as homeowners. So, seeing a large jump in consumer confidence gives hope that perhaps actual spending will increase.
Confidence and letting go of money are two distinct items. Consumers may be confident they will not be laid off or that they can survive with one spouse working, or that the pay cut will not bankrupt them. Neither of those scenarios mentioned spending more money and that will be the crux of where we go from here. Now, gold rallied hard from its lows today with news of the consumer confidence report with the hope that demand and inflation will follow.
Fears of a possible downgrade in the US bond rating is still a concern, after all, Japan, the largest economy in Asia was downgraded and the venerable, old guard England also got chopped. Some believe it is only a matter of time, and really just a matter of courage, before the US looses its Aaa rating. The reasons for gold moving higher may vary from day to day, and from analyst to analyst, but the real reason remains the same, that more people are willing to buy gold at higher prices than previously.
The downward correction in gold prices was broken earlier this month and prudent trading requires following the new trend: upward. The upside target from a week ago at $948 was met, exceeded, and today was defended (now becoming support). The $970 level becomes the next closet target, with the $1000 level the obvious ‘big number’ target. The chart looks increasingly like a nice, rounding bottom. Support comes in at $948 and then back at $935, and $928.
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.
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-- Posted Tuesday, 26 May 2009 | Digg This Article | Source: GoldSeek.com
