The real story in Gold is the unexpected narrowing of the trade deficit reported this morning, causing a swift reaction in forex markets:
US Dollar Index
Yesterday, prior to the deficit numbers Gold had sold off even as the USD was acting weaker:
Gold – broke down through the triangle – the Gold contract really needs a Yuan revaluation or some similar event to weaken the dollar and push price back into the triangle, but for now, thanks in part to this morning’s lower than expected trade deficit, it looks like a deeper retracement is in the cards until such time.
TSX Gold Index
Strategy – for me its simple, I will not be long the group until such time that the USD again shows weakness – we may see a test of the 85 level fail today, or it may take days or weeks or months before some other event causes USD weakness. When you have triangles as big as these are in USD and Gold, we can’t argue with price too much and live to tell about it.
05.05.11 09:23 #