-- Posted Friday, 7 August 2009 | Digg This Article
| | Source: GoldSeek.com
Dec Gold: Open= 965.2 High= 968.0 Low= 955.5 Last= 956.0 -5.5
Today’s unemployment report provided two diverging indicators about the health of the economy. First, unemployment dropped from 9.5% to 9.4% in the month of July, which at the first glance is positive until it is discovered that the percent of American adults working actually decreased. The unemployment figure counts only those who are actively seeking full-time work. Those that stop searching are dropped from the figure, allowing the unemployment number to seem smaller than in actuality.
Second, job losses last month were much lower than expected, when seasonally adjusted, and was the lowest figure since August of a year ago. This is positive, as the number of layoffs is slowing considerably. The number of hours worked and the average salary also increased slightly in July.
The reaction sent stocks higher on the day by about 1.0%, which generally would be supportive of gold. However, the U.S. dollar strangely found positive momentum in the hours after the unemployment report was released. It is not entirely clear what moved the dollar higher, but it should be noted, for the sentiment on the dollar is so negative that a correction to the upside may be due.
Helping the dollar recovery, in part, were some negative reports for the Euro in the past few days. German industrial output unexpectedly contracted in July after posting strong gains in June, the Bank of England announced to it would increase its quantitative easing program by $84 billion, and RBS posted weaker than expected earnings.
Or could it be precisely from the unemployment figures, which showed that more Americans are giving up on searching for employment and could be a harbinger of further economic times ahead? Or perhaps it was actual strength? If the U.S. can come out of the economic slump ahead of Europe and others, investors may feel inclined to put assets back to work with dollar investments instead of in other currencies. Compounding that, if the Fed does what it says it will, and shrinks the money supply when the time is right, the value of the dollar will rise as less money is in circulation.
Those are some interesting questions to which there are no answers yet. More likely than not the condition of the U.S. economy is improving but remains cloudy as to whether or not the recovery is simply a bear market rally or not. That uncertainty could have caused some shorts to cover their positions for now.
For gold, the chart is winding tighter and tighter, and a breakout on the chart will occur soon, either below $930 or above $970. December prices did hold above the 10-day moving average and near horizontal support in the mid-$950s, but at this stage, traders may want to be patient still and wait for gold to break out of this seven-month old, coiling chart pattern.
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
949 488 0545 x109
Fax 949 488 7625
-- Posted Friday, 7 August 2009 | Digg This Article | Source: GoldSeek.com
