Morning Gold Fix: June 17, 2010
Courtesy of www.fmxconnect.com
Gold closed $6 dollar lower yesterday, after rallying back into record-striking territory heavy prices were pushed down just shy of $1240 per 100 troy ounces. While investors continue to seek gold as a safe haven Spain’s announcement that it would be publishing the results of its stress test quelled some buyers concerned and provided the euro some much-needed support. Spain subsequently sold 3 billion euros worth of 10 year-bonds. U.S. Treasury Secretary Tim Geithner has shown how effective stress tests can be for calming the markets when he required the largest banks to undergo them in 2009.
It’s beginning to look like markets are finally pricing in QE2 (quantitative easing). Many believe the deflationary genie is out of the bottle and the conventional wisdom says it’s a long process to put it back in. President Obama will hit major political headwinds trying to push through a 2nd stimulus program but it’s looking more and more like a necessity with unemployment hovering just below the double digit (and that’s only the official measure). There can be no other explanation for the fact that gold has recoupled in its relationship to the dollar. Today the dollar is down, equities are mostly flat, oil is down slightly and bonds are unchanged for the moment.
The aggressive move higher this morning in gold (up $15 currently) tells us that more people are being converted and the market is going secular. Point of interest, there are those who believe we are running out of gold. We don’t necessarily disagree but as long as bars are gettable there is a lot of gold out there to be had. Moving forward, Comex vaults and lease rates will be the next indicator of intrinsic demand.
Right now technically speaking gold is at a triple top. I was taught “triple tops are made to be broken.” What this tells me is if there’s a 4th top, buy strength, don’t sell it.. At least for the short term. It also says that after the triple top is broken, if the market were to go back down through it, it will get ugly.
August gold was up 8.9 to $1239.4 per 100 troy ounces as of 8:09 AM EDT, this morning. The June U.S. dollar index was down .296 to 86.090. July platinum was up 11.0 to $1578.5 per 50 troy ounces. Silver was up 9.9 cents to 18.540.