Gold is above 1700. Now it seems just a matter of time before it will assault 50 dsma @ 1741, and if that breaks, it is heading for 1775.
I have been bearish on gold due to possible downward bear flag resolution. I was clearly wrong. My view was that in absence of QE3 and EU-induced Financial Armageddon gold has no business above 1750. Well, today it seems that European debacle is coming to the forefront again, and in the last few days FED doves have been flying the message of QE3 down to the market. In this scenario gold is in heaven. We are sure to have 50+ point days like today, if Dudley and Yellen have it their way.
I have a serious doubt that FED would be doing QE3 in response to economic numbers, as they have been getting better lately. The reason behind QE3 would be Europe. ECB is about to embark on major easing campaign, which will weaken the Euro. So FED does not want dollar strength to kill any possible uptick in US economy. Multinationals are bound to suffer at strong dollar's expense.
All of this possible money printing by two largest central banks is the biggest reason (in my opinion) behind gold's 100-point advance in the last 3 sessions. Today gold also got the message from dysfunctional EU. To make things even better for precious, SPX decided to take a plunge, thus giving gold all of its magical powers back, as it has been a hedge against falling equities, financial armageddon, inflation, and fiat currencies.
Gold successfully faked another breakdown. In my previous post I said that gold likes to fake these moves only to reverse hard. But really, there was never a daily close below 150 dsma, which has been a line of support for almost 3 yrs.
Bears, get the heck out of the way!
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