We've had a quiet day of trading as participants await the FOMC meeting and the ever important Non Farms Payroll number, with gold moving in a narrow range between 1322 and 1339.
The market appears to be forming a consolidation pattern similar to that seen in late April and mid June after the last corrective rallies. The question is, will we see another sharp decline as we saw after those consolidation patterns or is this the start of a new rally phase with 1180 the major low for this decline?
We see little to suggest a major bottom is in place, with trading volumes lower on up days than down, a feeble response to sustained dollar weakness and continued equity strength diverting funds away from the metals. There is no doubt that the US economy is improving, as is the UK with GDP +0.6% for Q2 - even Europe is showing some signs of life. The expected wave of inflation following the Quantitative Easing experiment has not materialised and will not do so and real interest rates are rising.
The reasons for owning gold as an insurance against economic collapse or inflation have receded and ETF holdings continue to fall every week in response to this. Physical demand out of Asia, China in particular, is still strong and is the only reason we are not seeing gold below $1000 right now. Even Indian gold demand has fallen, largely due to a weak currency and onerous government restrictions on gold imports (we've even seen some of the "conspiracy theorists" claim that India is part of the global conspiracy against gold and is helping the US suppress the gold price by introducing these measures - honestly!).
We have said many times before that if the Western governments have really been colluding to suppress the gold price during the last decade they've done a pretty appalling job of it, seeing the price rise from under $300 an ounce in 1999 to over $1900 in 2011! Whoever was coordinating that particular project must have had their marching orders!
We expect the holding pattern to continue until at least , though improving economic data releases may see the bears attempt to push the price down before then as they still have the upper hand.
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TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED.
TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED.
Do your own due diligence.
No one knows tomorrow's price or circumstance.
I intend to portray my thoughts and ideas on the subject which may s be used as a tool for the reader.
I do not accept responsibility for being incorrect in my speculations on market trend.
I intend to portray my thoughts and ideas on the subject which may s be used as a tool for the reader.
I do not accept responsibility for being incorrect in my speculations on market trend.
King Regards
