Gold is approaching key supports above 850 and the risks of it being taken out is now higher after silver’s convincing movement below a similar support seen around the $16.00s. According to 5 August 2008, Commitment of Traders report, large speculators have reduced their net long positions by 18,591 to 163,728.
Massive positions in Gold were unwound by both large funds and commercials bringing open interest to a new low of 388,384 lots. Heavy stop losses are suspected to be working just below $850. If prices were to plunge through $850, panic selling and stops triggering may bring Gold to an attractive level for physical buyers
If you also look at the Spot US Dollar Index Chart, you'll noticed that Dollar is reaching for resistance line while the Gold charts are approaching support line
In the near term of next few weeks, we'll be witnessing if Gold/US will break their respective support and resistance. If that does occur, there could be a huge move of fund from commodities to the dollar.
Comments by the European Central Bank (ECB) about risks to economic growth in the second-quarter ’08 and diminishing expectations of an interest rate hike as commodity prices continue to ease led to a sharp sell-off in the currency markets as the dollar recorded on Friday its biggest one-day gain versus the euro in 7-1/2 years.
In our view, we don't think the gold support will be broken; and the dollar resistance will not be taken out. There may be a rebound in both case.
Massive positions in Gold were unwound by both large funds and commercials bringing open interest to a new low of 388,384 lots. Heavy stop losses are suspected to be working just below $850. If prices were to plunge through $850, panic selling and stops triggering may bring Gold to an attractive level for physical buyers
If you also look at the Spot US Dollar Index Chart, you'll noticed that Dollar is reaching for resistance line while the Gold charts are approaching support line
In the near term of next few weeks, we'll be witnessing if Gold/US will break their respective support and resistance. If that does occur, there could be a huge move of fund from commodities to the dollar.
Comments by the European Central Bank (ECB) about risks to economic growth in the second-quarter ’08 and diminishing expectations of an interest rate hike as commodity prices continue to ease led to a sharp sell-off in the currency markets as the dollar recorded on Friday its biggest one-day gain versus the euro in 7-1/2 years.
In our view, we don't think the gold support will be broken; and the dollar resistance will not be taken out. There may be a rebound in both case.
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