Will Gold's Mini Rally Hold?

Gold
After falling by nearly $30/oz on Tuesday, to $926/oz, gold experienced a mini rally Wednesday, moving back to $938/oz in early trading. Whether this is a temporary bounce after a significant sell off remains to be seen. Better than expected US jobless figures, a rally in equity markets and strong demand for the 7 year US Treasury Bill issue Wednesday, may detract from gold and a further correction may be imminent. If the metal does not hold above $945/oz then a move to the downside of $905/oz would be more likely. However, this would present an excellent buying opportunity as the longer term view of gold is extremely bullish with $1,033/oz an achievable target in the coming months.

Silver
Whilst silver tends to hang on to the coattails of any short term move in the gold market, technically it is underperforming gold at the moment. If silver does not maintain a hold above $14.20/oz this would post a bearish signal and a move downwards. Possibly mid $12s/oz could be the next stop. However, some analysts believe that the fact that large shorts are not shorting silver as much as gold as seen in the commitment of traders report, could lead to silver decoupling from gold and significantly outperforming gold on the upside in the coming months.

Platinum group metals
Platinum regained some ground Wednesday, moving from $1,169/oz to $1,185/oz boosted by strong buying interest on the Shanghai Gold Exchange. $1,200/oz is still a strong resistance level. Palladium is $256/oz and rhodium is $1,575/$1,675/oz.

Disclosure: No positions

Comments

[bloodbankbob:]

Gold price has been counterintuitive to treasury demands. It would not surprise me if GS and FED worked together to temporarily boost the dollar when they have a large issuance to unload. The "pennies from heaven" gained (as in "Bonfire of the Vanities"), outweighs the small drops achieved by trading encouraged by the Fed for GS's advantage. I believe it was Bernanke who recognized a simple relationship between manipulating currency by controlling the price of gold. These are short term gymnastics, since the Fed would like nothing more than a controlled increase in inflation in order to lower the debt. In the meantime, until some jobs and the economy can start to improve, GS will continue to make huge gains from the backing and winking of the Fed.

Jul 31 12:55 PM

[GMiki1:]

Nice day for gold and silver. GS covering its shorts? Last day of the month, end of the week--sgnificant numbers to the black boxes.

Jul 31 02:11 PM

[GMiki1:]

Freya, Interesting, and yet the five-year auction was a bust. The market will decline big, but when? Maybe late September according to Arch Crawford, who also says late next year (the fall) will be a big decline.

Jul 31 04:32 PM

[ManAboutDallas:]

Critical juncture here for the $ . It painted another slightly-lower low this afternoon. If the Asian markets don't kick it off this ledge come their Monday morning, 8-3, a very short, sharp $ rally might be in the works next week. They tried to do it this past Wednesday and Thursday, but it fizzled. If they do kick it off the ledge in Asia Monday morning, yes, it's free-fall all the way to 75.

Jul 31 04:34 PM

[ManAboutDallas:]

"Tiny Tim" is probably the best, most prototypical, example of "The Peter Principle" to ever find themselves in over their head in the position they hold.

The man raises "Unprepared, Unqualified, and Undeserving" to an art form.


On Jul 31 04:47 PM Freya wrote:

> China showed Geitner the kind of inflence it had on our Debt Markets.
>

Jul 31 07:07 PM

[Mono:]

big buyers step in. maybe china getting back on board.

agreed on the week kicking off thursday. started building positions at 930.


On Jul 31 04:09 PM Freya wrote:

> GMiki1: Big Auctions all week. How to get them done?
>
> Strong USD, weak oil and Gold, strong/fake out stockmarket.
>
> Reversion by Thursday. oil/gold up. USD down. Stockmarket treading
> Deep water.
>
> With a punch by the dollar, to the 75-76 area, How steep will the
> Market decline? I'm guessing 20%.

Jul 31 07:26 PM

[Smu the Won...:]

Anyone have opinions on PowerShares PSAU?

Jul 31 09:23 PM

[nmelendez:]

China does not care, it's got plenty of gold in the ground. When China stops buying US then worry.

Jul 31 11:33 PM

[nmelendez:]

BTW, silver only shines when gold is too expensive for the common man too buy. That's when silver shoots up.

Jul 31 11:36 PM

[Northstar10000:]

Dollar rally ahead, Gold/Silver will go down along with stocks and oil.
Set up for a Sept/Oct time frame rally. End of year fire works when funds will be forced to chase stocks or fall behind yearly numbers.

Aug 01 10:12 AM

[Stockwash:]

I have created the Eagle expert using the Eagle Index in order to have a better view of what is happening in the markets.
Eagle expert on $GLD entered yesterday in the green bullish area. I have posted a graph here chart.ly/sp2ngy
Short term, looks like a rally in gold is very possible. Long term, we have to look Eagle on $GLD with weekly data. I will try to post a chart by next week.
Many Elliott wave analysts predicts that a further drop in gold is very possible. Eagle must show this first.

Aug 01 12:01 PM

[nmelendez:]

Everything points to gold going down. Everyone's bearish and betting on a retrace of gold to 680. Plenty of shorts out there and the goldbugs are silent. hmmmmmmmmmmmmmm

Aug 01 06:04 PM

[chux08:]

"Everything points to gold going down. Everyone's bearish and betting on a retrace of gold to 680. Plenty of shorts out there and the goldbugs are silent."

One thing FOR SURE and that's IF gold does go to $680, I'll be there buying all the way down, every $20, and I'll be prepared to buy even more ALL THE WAY TO ZERO. (When has an ounce of gold ever been worth....zero?? Hint: NEVER. According to Stewart Thomson of gracelandupdates.com, gold is the least riskiest investment IN THE WORLD).
But if it goes to $970 (every $40 up) or higher, guess what? I'm a seller into strength and I'm booking profits. PRICE dictates what I'll be doing. Not gold market crystal ball gazers who more often than not lose their nerve (if they ever had any) and bail on their positions at the slightest downturn, as well as their subscribers. If the gold community would just trade gold like the bankers and that's BUYING WEAKNESS and SELLING INTO STRENGTH, they'd beat them at their own game. Till they learn that, it'll soon be crying time again....

Aug 02 03:16 AM

[HA65MPH:]

FREYA , EXCELLENT QUESTION !

Aug 02 03:19 AM

[DONE_SONZ:]

>Everything points to gold going down?>Oh please explain wiseman.


On Aug 01 06:04 PM nmelendez wrote:

> Everything points to gold going down. Everyone's bearish and betting
> on a retrace of gold to 680. Plenty of shorts out there and the goldbugs
> are silent. hmmmmmmmmmmmmmm

Aug 02 08:15 AM

[KIT:]

The bond market is king, the US is having trouble selling bonds at 3-4 % and they MUST sell them so rates MUST increase 5 6 7 % what ever it take to move the bonds. This increases the value of USD as its once more in demand..... GOLD and ALL commodities will fall. Oil has to be lower for the economy to rebound. The FED has bought enough bonds to stop the free fall. Monitizing debt further offends the number one trade partner ( China ) and past debt holders ( Europe ). The balance becomes rate vs mortgage failures and the ability of the big banks to absorb the loss. The writing of new mortgages at lower home price but higher rates helps. I you have a high price home at low interest get ready to lose it.... It is in the governments interest to have funds in gold turn to Bonds or to the market. The pressure may be slow but it will be relentless. The bond market is ten times the size of the stock market they need higher rates to save states and cities or the US will have to bail them out too ( its just too much ) Bond holders have to have higher rates to step in.


On Aug 02 08:15 AM DONE_SONZ wrote:

> >Everything points to gold going down?>Oh please explain wiseman.
>

Aug 02 11:47 AM

[DONE_SONZ:]

How much will the dollar be worth when our massive debt defaults because of lack of growth due to higher rates?


On Aug 02 11:47 AM KIT wrote:

> The bond market is king, the US is having trouble selling bonds at
> 3-4 % and they MUST sell them so rates MUST increase 5 6 7 % what
> ever it take to move the bonds. This increases the value of USD as
> its once more in demand..... GOLD and ALL commodities will fall.
> Oil has to be lower for the economy to rebound. The FED has bought
> enough bonds to stop the free fall. Monitizing debt further offends
> the number one trade partner ( China ) and past debt holders ( Europe
> ). The balance becomes rate vs mortgage failures and the ability
> of the big banks to absorb the loss. The writing of new mortgages
> at lower home price but higher rates helps. I you have a high price
> home at low interest get ready to lose it.... It is in the governments
> interest to have funds in gold turn to Bonds or to the market. The
> pressure may be slow but it will be relentless. The bond market is
> ten times the size of the stock market they need higher rates to
> save states and cities or the US will have to bail them out too (
> its just too much ) Bond holders have to have higher rates to step
> in.

Aug 03 07:20 AM

[KIT:]

Just imagine the value of the USD if you default and return the USA to debt free after China, Japan and Europe write down the old bonds. ( default will not happen the current holders of bonds will buy to prevent default ) At the end of WW2 the US as just as in debt to GDP as now. Cuts to Social Securty can cover the increase in bond rates.

Raising the dollar with high rates collapses commodities giving life blood to the major US industries world wide


On Aug 03 07:20 AM DONE_SONZ wrote:

> How much will the dollar be worth when our massive debt defaults
> because of lack of growth due to higher rates?

Aug 03 02:52 PM