Red-Hot Resources

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Wednesday, May 09, 2007

Conflicting Signals on Gold

Looking at a short-term (daily) chart of gold, I see mixed signals. Take a look for yourself ...
How will this work out? I think resolution may come from another source, the FOMC meeting today. The US dollar has rallied going into the meeting, because traders are pricing in the chance that the Fed might hint at raising rates. I think the Fed is more inclined to a "steady as she goes" course. If my hunch is right, the US dollar could sell off after the meeting. And that could provide a boost to gold, perhaps enough to get above overhead resistance.

What if I'm wrong? Then we could see gold go back and test the 670 level. However, the longer-term fundamentals for gold are very bullish, so this would be a great buying opportunity. It seems win-win to me.


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