We’ve got to get gold to move higher or lower and get out of this trend. Now that we have the Fed and some data to work with, I think we’ll get a move one way or the other and the dollar will lead the way. Another issues is whether the stock market will continue its move higher and put pressure on gold. After a bump in interest rates will rates now come back down?
We seem to be staying above the November 5th low of $1,158 and until we break below that I have to lean bullish. To be bullish gold the dollar I think would have to continue this short term decline below 94 on the Index. To be bullish gold the mining stocks need to mount a bit of a rebound and the problem is, some of them are breaking down a bit.
With gold presently at $1,189 I need to see a move over $1,200 and then above $1,215 to be bullish. Right now we are still in no man’s land. It’s been choppy so long people are forgetting why they bought gold to begin with. With Friday’s unemployment rate dropping to 5.4%, there is no real fear in the market. This has to concern gold bulls. But for me to give you a bottom line, I have to turn to the dollar and the further it falls in the short term, the more I have to lean bullish. Lots of data coming out of Europe this week so lets see what the dollar does as a result. If we start seeing some good data from Europe, that can put more pressure on the dollar and be good for gold.
Gold rose 1.2% last week and this might be a sign that after 3 months straight of lower prices we are heading higher. We are also getting closer to the normal good summer months. Risk vs reward to me is still on the long side for gold, despite my insisting the bottom is not in and we will at some point still head lower below $1,000 an ounce.
No matter where I lean, I have to look at the indicators to guess the short term. My advice never wavers though; if you haven’t bought any physical gold, dollar cost average into a position. If we do get the decline, you’ll have a better overall price than simply buying all your allocation today.
While the stock market seems to be struggling a bit, I still lean bullish with it and we may see a run higher. This too concerns me a bit with my leaning bullish in gold, but it could help the miners for a bit.
Below is the data to keep an eye on this week.
Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
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