To: Goose94 who wrote (14531 ) 10/18/2015 7:58:32 PM From: Goose94 Read Replies (1) | Respond to Four Factors Gold Traders Should Consider NowThe bullish gold trend is building legs . A strong daily uptrend pattern is building from the July low at $1,073.70 to this week's high at $1,191.70 in December Comex gold futures. The trend pattern is bullish, with higher daily highs and higher daily lows. The moving average picture has turned positive, with gold trading just above its 200-day moving average this week. See Figure 1. In the short-term, gold is vulnerable to some "backing and filling." Watch for modest downside correction and pullback. Daily momentum indicators touched overbought levels this week and are turning down. The market is bumping up against its upper daily Bollinger Band line and also near the top of a rising daily bull channel. Modest correction may be needed in the short-term before a strong assault on the $1,200 level is possible.A Fed rate hike in 2015 will be a coin toss. The Fed remains in a delicate dance, with comments from top central bank officials confusing. Some want to hike rates, others want to wait. What data should they consider? And, what about the global economy? Inflation still a question. The other side of the Fed's mandate—stable inflation, also saw improvement in the economic data this week. The core consumer price index (CPI) gained 0.2% in September, a stronger-than-expected gain. That leaves the overall number up 1.9% on a year-over-year basis. However, much of the gains were attributed to a 3.2% increase in shelter costs, which alters the underlying inflation picture and economists say doesn't paint a true picture of increasing inflation. Inflation worries are global. "The U.S. isn’t alone in dealing with low inflation. France’s consumer price index rose 0.1% on a year-ago basis in September, and Spain’s CPI fell 0.9%. Italy’s CPI rose a trend-like 0.2%. Chinese consumer prices softened to 1.6% year over year in September, and producer prices fell 5.9%," says Ryan Sweet, managing director at Moody's Analytics. The argument for a rate hike in 2015 or against a rate hike in 2015 can be made easily in either direction. At the end of the year it will be a coin toss. The current Fed funds rate is at all-time lows. Does the Fed just simply want to get started on its policy normalization process? If yes, a 25 basis point hike may be in order at the December meeting. A token move –to reiterate the Fed's confidence in the U.S. economy. But, at the end of the day, 25 basis points is 25 basis points and the federal funds rate will still remain near zero, below the 1.00 percent mark and well below all historical and long-term averages. Bottom line: Gold traders should consider how much impact a small rate hike really means for the metal in the long-term. Gold investors buy gold for many reasons and accommodative global monetary policy (which isn't going away anytime soon –look at the Bank of Japan and the European Central Bank) are only one factor. By Kira Brecht
