I would assume $1130. My personal opinion is that the terms support and resistance levels are applied to charting areas that don't warrant such a conclusion. If I have learned anything in the last 3 years, it is that supposed support and resistance levels have not been reliable and there have been far too many false breakdowns and breakouts. Rambus is an excellent example of this situation. Many people have written that he is the best chartist they have seen. And yet he has been whipsawed in many trades. He just closed out his xxx short positions about 3-4 days ago, right before pms started dropping. Now he is starting xxx short positions again. Gold sales don't really tempt me. Since I believe gold is likely headed to the $900-$1,000 area, why do I care if a 1oz bar is for sale for $1200 vs. $1230?
$1175 coming back if the Dow has another 200 point shit sneeze (just made that up, pretty happy with myself).
Until the USD index tops which doesn't look likely in the near future then I would think gold should continue to sell off. The Euro needs to find a bottom which is at least going to parity which may signal the USD top but that doesn't take into account possible further devaluations from other major currencies as they strengthen against the Euro such as the Yen and possibly the Chinese devaluing the Yuan as it's pegged to the strengthening dollar.
The yen might have some room left to move but there are some nice signs coming from the economy (nice by cnbc standards so maybe close there). Euro parity seems to be the ECB goal though nobody is saying it (even though everyone is predicting it). If they get close and the sterling starts to tick up against the usd we might be there (a dollar top). The USD index has gone from 86 to 99 since November, the same month that gold dipped below $1150. That's a 15% gain in DXY with a 1.5% gain in gold even at our current lows. Frankly gold is doing pretty well if you think that there's an ironclad correlation between the DXY and gold. I actually think there should be a consumer index you should be able to compare gold to because with currencies the way they are it's hard to gauge where it's really at. Big Macs at your local to an ounce or ounces to median house prices or something. Apparently a bunch of the US volatility indexes are getting a little hairy, should be an interesting Friday.
As Jim Rickards says.. buy on the new york close.. price has been driven down $10 or more from Europe.. after going up all day in asia.. Bears (central banks aka IMF, BIS etc) are winning but there is an opposing force maintaining key levels and monitoring the drops .. Nothing organic about this gold market, trouble is physical commodities cannot be downramped over the "long run" or the medium term as when costs exceed revenue they cannot sustain operations causing an incremental supply side decrease . I fear as usual, the weaker trade partners will get hurt at the expense of a stronger US$ as the trade nessesarily creates inflation
I'm not so sure that the dollar will stay high enough to make it work. I'm sure there would be a window in there but your pretty much gambling that nothing in the states will go wrong because that will probably be a usd top. They certainly aren't likely to increase rates again if the DXY is at 110, your starting to get into territory that's really going to screw with the commanding Heights of the US economy. Ill be selling my USD when it hits 105, god knows I have enough usd exposure in my PM.
If the US shit sneezes at 110, where else is capital going to flow to? The ECB and BoJ aren't going to be raising interest rates anytime soon? gold and a melt up of commodities will be the last place it'll go and only after sovereign bonds start selling off. Capital will continue to flow into the USD, US bonds and the US stockmarket until confidence is completely lost.
Good use of the lingo. I think you'll see money go to all the safe little places like crazy. Singapore, Malaysia and Switzerland for safety and places like Vietnam for growth, I haven't been paying attention to SGD but the money has to go somewhere if they leave the US, might be worth a look. Capital will keep flowing to the US until the moment people call a top then immediately lock their profits at the first hint of a turn by pulling money back out into their native currency. You would have to be pretty bullish on the US to buy equities with valuations the way they are now if the DXY is at 110, almost everywhere in the world that's got to look really dammed expensive. I don't think anyone would have paid 125 for Apple 6 months ago but that's what it will cost in a few weeks. I'm not sure a quater point bump in intrest rates will tempt that many people out for interest based instruments. Not sure the rate rise will happen if there's another multi hundred point dip or the GDP figures are as bad as some people are predicting (probably the winter weather, right? . Might see a big DXY jump as people try and get in before the interest jump and subsequent USD increase then a big pullback after it doesn't happen. $1.05 euro going to parity. Amazing times we live in.
