-- Posted Wednesday, 26 August 2009 | Digg This Article
| | Source: GoldSeek.com
Dec Gold: Open= 946.2 High= 951.7 Low= 941.2 Last= 945.5 +0.8
Equities provided another unchanged day. Rallies in stocks could not be sustained, but bulls have yet to throw in the towel. Tomorrow might be the make or break day as initial jobless claims and a revised 2nd Quarter GDP figure are released. Bulls have been unable to push stocks, energies, or metals higher in the past few days and barring a major spike downward in jobless claims, those holding long positions may capitulate heading into this weekend.
Regarding today’s reports, durable goods orders were up 4.9%, though mainly due to large airplane orders through Boeing and the ‘Cash for Clunkers’ program. Excluding transportation goods, the figure was up only 0.8%, less than stellar and clearly disappointed the market. Equities turned negative after giving the report the once over but sellers apparently did not want to push aggressively lower until new-home sales were reported.
A 9.6% increase in new-home sales in July off-set the so-so durable goods orders, but still stocks ending the day near even, for the third day in a row. The last time stocks went sideways in this fashion was back in June, and the SP broke lower for 70 points before resuming its march higher. The market appears to have drawn a battle-line at this level, and bulls are losing momentum as bullish news isn’t pushing the market higher anymore. What was higher today was the U.S. dollar index, and the possibility of a correction in stocks and a rally in the dollar will likely put gold prices under pressure.
It is hard to come up with a bullish scenario for gold if stocks do correct, and the dollar rallies, which is perhaps more important. With home prices still falling, wages stagnant, commodity prices high but much lower than the past two years, inflation is still a few quarters away from surfacing. A correction could be very healthy for both stocks and gold, as news is becoming stale and bulls are losing ammunition to push above resistance. The odds of commodities dropping tomorrow are higher than that of uber position news stemming for the jobless claims and revised 2nd Quarter GDP.
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Thomas Hartmann
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-- Posted Wednesday, 26 August 2009 | Digg This Article | Source: GoldSeek.com
