I am getting interested in gold ahead of the FOMC meeting. The market has fully priced in a no rate hike announcement and it's pretty obvious they will oblige. But inflation is still here and there could be some comments to that effect and that would make gold interesting. If the Feds are perceived as being soft on inflation, then gold will resume its place as a hedge. The stagflation scenario is still very much in contention. There is little doubt that at some point, you want to be back in gold and aggressively so. We have one more week of ECB inventory clearance, but I think traders will start putting on more gold positions as that day approaches (9/26). The problem for now, aside from the drop in oil, has been the dollar rally and the desire of European central bankers to try and stem the rise of the Euro to protect their exports and that has been a one two punch against gold. So there is still downside risk and any long position should be carefully monitored. As you know, I had profiled December gold to possibly hit a low of 577 where it would find support and it did. Let's see if it holds going forward. If it doesn't, next support is 568, followed by 560. If 560 support breaks, it's straight down to 539 which I would buy like there is no tomorrow. Resistance is 587/590. But let's give 577 a chance until proven otherwise.
This entry was posted
on Saturday, September 16, 2006 at 9:38 AM.
