-- Posted Wednesday, 15 July 2009 | Digg This Article | | Source: GoldSeek.com

Aug Gold:  Open= 925.4 High= 942.3 Low= 924.5 Last= 939.9 +17.1

The largest gains in the stocks this quarter helped buoy gold prices in a very strong session today.  Better than expected earnings reports from Goldman Sachs and Intel over the past two days, coupled with good industrial production figures and higher CPI readings, proved to be a very supportive combination.  Continued improvement in the economy is necessary to keep a bid on gold.  Weakness and fear of resumption of the recession lends strength to the U.S. dollar ultimately.

It is important to remember than the lows made in the S&P back in early March were essentially pricing in a Depression like sentiment.  That no longer is the case, which is why stocks have rebounded quite strongly in the past thirteen weeks.  The recession has lasted for some 16 months now and it is likely we’re much close to coming out of it than returning to the nadir.  

What is still sinking, however, is the dropping value of the U.S. dollar.  The Obama Administration and Congress apparently are not greatly concerned with losing status as the global reserve currency.  This position is the envy of the world, as it gives enormous power to the United States in financing our own debt.  There are limitations, though, and the global community is becoming increasingly concerned that our government is disinclined to reign in gratuitous spending habits and burgeoning account deficits.

Once the rest of the developed world dusts itself off from this recession, the outlook of the U.S. dollar is negative.  The U.S. will spend tens of billions of dollars every month simply paying off interest on our growing debt and Congress currently sees this recession as an opportunity to expand costly and non-productive social services to further weigh down the future potential of this nation.  Conservatives see this, Libertarians most certainly do, some moderate Democrats do, foreign currency traders do, foreign national leaders do, but those in control of the nation have a blind-eye turned towards this ruinous outcome.  The shift away from one dominant currency will upset the currency markets, allowing gold to continue acting as a currency and an anti-dollar hedge.

Although August gold did not break through the thick layer of resistance at $940 today, the positive action over the past few days is making gold a cautious buy on weakness.  The MACD has turned positive after today’s close, the market flew past the 10-day moving average, and if jobless claims don’t sabotage the good sentiment tomorrow, the market faces a relatively quiet week ahead of it to consolidate these gains.

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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-- Posted Wednesday, 15 July 2009 | Digg This Article | Source: GoldSeek.com

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