Chip, I agree about Gold and have made a few comments
on SI in the past few days that I belive we put in
the bottom in Gold 15 months ago already.
In Elliott wave theory, prices will make a bear market
low and then rally like the move from 250 to 339,
in Oct of 1999, then prices will correct downward in a
wave 2 and the psychological enviroment can be even
more bearish at the wave 2 low, than it was at the actual
earlier price low. (in this case Oct 1999)
We have seen that imo.
the commercials are net long, and the large speculators
are short.
The Dec7 top-reversal-type high at
27780 is the overhead benchmark above which prices would need to trade to
confirm an upside exit from the ongoing 10 month triangle and to thus define
an up trend phase. Prices rallied quite sharply yesterday with range expansion.
Given stochastic turned up suggests a test of the 277.80 is going to be
attempted.
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After stabilizing in the mid/high-$260 area for most of
November, the February gold futures advanced to test
$278 before subsequently moving back toward the $270
level. In regards to fundamentals, the gold market re-mains
squarely focused on the U.S. dollar’s trend against
currencies of countries that are major gold consumers
and producers. Consequently, gold prices remain ex-tremely
sensitive to trends in the euro, Indian rupee,
Australian dollar, South African rand and Canadian dol-lar.
Therefore, the November–December recovery in the
euro, Australian dollar and Canadian dollar against the
U.S. dollar has supported the recent, modest rebound in
gold prices. We would expect that gold prices will con-tinue
to recover, if sustained dollar weakness persists,
especially in light of the fact that gold demand tends to
rise seasonally ahead of the new calendar year and, for
some markets, strong demand extends to the Chinese
New Year on January 24. In fact, the gold market could
be in the process of setting a major price low, assuming
corresponding major lows for currencies of large gold-producing
and gold-consuming countries are realized.
Some of the steam was taken out of the upmove in gold
prices following the release of weekly data from the
Commodity Futures Trading Commission that showed
for the week ended December 5 the net short position of
large speculators for COMEX gold futures was down to
26,921 contracts (83.7 tonnes), from 36,201 contracts
(112.6 tonnes) a week ago and 46,456 contracts (144.5
tonnes) two weeks ago. The data suggested that specu-lative
short-covering was underpinning the recovery in
gold prices. Since the release of the data, gold prices
have been on the defensive. We would expect the gold
market to closely track this CFTC report, released weekly
on Friday. |
