At 8:30 this morning, I showed my co-workers the same chart on gold that I showed you on Friday. You can find it here: http://tinyurl.com/qh58v That support is holding today (hooray!).
Then I took a look at the dollar...
As of 2:45, the US dollar future is right up against that former uptrend. Tomorrow will be a telling day.
Then I took a look at oil, which I see as a wild card. As of 8:30 this morning, it was not showing the strength of precious metals. I have called for a bounce potentially starting at 60, but also said real support is at 57.70. Here is an updated version of the chart I sent out when oil was at 64…
From this morning's commentary: "Will oil go to 57.70? This is important for gold, because oil and gold are 81% correlated. A further dip in oil could cause gold to retest support at its 50% retracement of its big bull run and then some."
Well, as we all know know, oil bounced today. OPEC is grumbling about maybe cutting production. I doubt they will anytime soon, but it was enough to scare some bears out of positions.
I think tomorrow (Tuesday) could be a telling day.
Also, I sent some Bloomberg headlines (and the first paragraphs to go with them) around to my coworkers...
1) Oil Drop Robs Mutual Funds of $4.5 Billion; Fidelity Falls 12%
Sept. 25 (Bloomberg) -- Mutual fund investors, captivated by
oil's 88 percent appreciation in two years, increased their
energy holdings in 2006 just in time to lose $4.5 billion.
2) Russia, Canada Stock Indexes May Fall, Matching Commodity Crash
Sept. 25 (Bloomberg) -- The plunge in the price of oil, gold
and copper may hurt stock markets in countries such as Russia,
South Africa and Canada, which until now have performed better
than the commodities that underpin their economies.
3) Copper Drops a Second Day; U.S. August Home Purchases May Slow
Sept. 25 (Bloomberg) -- Copper fell for a second session in
London on speculation an industry report will add to evidence
U.S. economic growth is slowing. Nickel declined after Inco
Ltd., the world's second-largest producer, reached an agreement
with unionized workers to end a two-month strike.
Sales of previously owned U.S. homes dropped in August to
the lowest since early 2004, economists expect a report by the
U.S. National Association of Realtors to show today. Copper has
quadrupled in the past five years, partly fueled by demand for
pipes and wires used in U.S. homes.
4) Iron Ore Prices May Rise Next Year on China, Australia Says
Sept. 25 (Bloomberg) -- Iron ore prices may rise next year
as demand from steelmakers in China outpaces supply, the
Australian government's commodity forecaster said.
XX Sean’s note – can copper prices go down when iron prices go up? I think somebody’s making the wrong bet.
5) Gold May Climb as Central Banks Slow Sales of Bullion (Update1)
Sept. 25 (Bloomberg) -- Gold may rise for a second week on
speculation that European central banks will reduce sales.
Eighteen of 27 traders, investors and analysts surveyed by
Bloomberg News from Sydney to Chicago on Sept. 21 and Sept. 22
advised buying gold, which rose 2.1 percent last week to $595.40
an ounce in New York. Six people said to sell, and three were
neutral.
posted by Sean Brodrick @ 2:50 PM
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