-- Posted Friday, 28 August 2009 | Digg This Article
| | Source: GoldSeek.com
Dec Gold: Open= 949.5 High= 964.6 Low= 949.5 Last= 956.2 +8.9
An interesting day left some confusing signals on many charts to end the week. The biggest gaining sector today was the metals, with silver and copper leading the way higher with a solid 3.5% gain, holding strong into the close. Gold finished the day about 1.0% higher, up $8.90 per ounce, at $956.20. All this coming on a day when stocks failed to hold early gains, finished slightly lower and the U.S. dollar gained slightly against all the major currencies. Even crude oil and gasoline finished the day positive.
The highs in gold today crept very close to the upper boundary of two converging trend-lines but early strength gave way when stocks retreated early in the session. Prices did close at their highest level in fourteen sessions, giving bulls a bit of positive momentum heading into next week. While the trend in gold is sideways, the same cannot be said for the U.S. dollar which is downward. The pace that its value is dropping has slowed in the past month, but the trend still exists. About the only positive news that people can find for the dollar is that a lot of people are bearish of it. While contrarians may point to this, it is not exactly a vote of confidence.
That said, looking at the charts of crude oil and gasoline, and one instantly sees strength and the potential for another leg higher in these markets. It is possible that a catalyst to propel gold higher isn’t really needed, just that the forces opposing higher prices simples gets tired of the fight and gives in. That the metals sector could find such strength today in the face of flagging equities some give some quiet confidence to bulls, for over the past many months was falling hard on equity weakness and finding only mild support on equity strength. Today marked a bit of bullish divergence in the pattern, something gold traders should take note of as this squeeze in prices nears an end.
It still makes for a good trade to buy futures near current prices and buying an at-the-money put (955 strike) for about $40 an ounce. For if gold breaks to the upside, what bull thinks that prices will stop at $995, as this strategy will capture any gains made after prices reach $995. From a technical perspective, prices should move about $130 an ounce in the direction of the breakout. Yes, the strategy is more conservative that simply going long the market, but the protection against the downside will allow a trader to rest comfortably and let the market play out without fear of a major dollar reversal.
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, 28 August 2009 | Digg This Article | Source: GoldSeek.com
