The movement in the US dollar appears to gaining a bit of momentum, as buying pressure held over the weekend to help contribute to today’s rally. On the charts, a small inverted head-and-shoulders formation is in the works, opening a possibility that the index could rally another 3% higher. Optimism that had helped pushed global equity markets higher has soured as too many traders and investors have sat on one side of the boat, making it tip and causing some to bail out.
Inflation still appears to be too far off to be a bullish influence on gold for now.Job losses, unemployment, and falling number of hours worked are all taking a bite out of wage growth.There is simply not an excess of dollars in the hands of consumers at the moment, which is a key driver of inflation.Prices of commodities may rise, as we see in oil, gasoline, and some foods, but this may actually have a negative impact on consumer spending in the months ahead.With the price of gasoline topping $3.00 on the West Coast now, and supplies hitting 5 year lows, its safe to say that prices this summer could be reminiscent of last year.$4 gasoline proved to be quite deflationary indeed.
It does not appear that explosive inflationary pressure is just around the corner. Traders that want to be simply long futures ought to wait for some sort of washout in the low $900 range as proof that buyers are stepping back into the market. If predictions about gold being priced at $1,500 or higher turn out to be true, then allowing the market to prove its strength is a wise decision. Expect prices to test the $915 level for a full 61.8% Fibonacci retracement level.
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 attom@altavest.com. Visit www.altavest.com to request a FreeTrading Kit. Keep in mind that there is risk of loss in all trading.
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