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A Near-term Bearish Outlook
June 13, 2011 Update
A dead cat bounce or whatever you like to name it, in near-term dollar is set to appreciate and that will put pressure on gold. QE2 is coming to an end at the end of the month and it gives the greenback a good reason to rally, knowing that euro is in a worse situation.
The metal had a nice steady run toward old highs as we expected and discussed in the last update, but despite all the fundamentals supporting a new high, like continuing issues surrounding Greek debt and the euro zone, Japan’s renewed nuclear crisis, and the disappointing May unemployment report, and the gloomy outlook of the U.S. economy, gold did not advance to a new high. Now it looks weak and is reversing the trend.
That makes us near-term bearish on gold as quantified by the score on the right hand side. If prices fail to hold the $1,500 an ounce, the downtrend in gold prices is confirmed. Will the gold market crash? No need to panic as the fundamentals indicate a weaker dollar and a higher gold, mid- and long-term. A correction can be healthy for gold; as Rogers say, it ensures the gold bull run stays intact. QE3 is on the horizon but needs to see some negative economic data to come out. U.S. debt is hiding behind the Greek chaos but sooner or later needs to be dealt with. James Bullard says a U.S. “technical default” is the biggest risk to the world economy.
Source: http://seekingold.com/index.php/gold-price-trend-and-forecast.html
June 13, 2011 Update
A dead cat bounce or whatever you like to name it, in near-term dollar is set to appreciate and that will put pressure on gold. QE2 is coming to an end at the end of the month and it gives the greenback a good reason to rally, knowing that euro is in a worse situation.
The metal had a nice steady run toward old highs as we expected and discussed in the last update, but despite all the fundamentals supporting a new high, like continuing issues surrounding Greek debt and the euro zone, Japan’s renewed nuclear crisis, and the disappointing May unemployment report, and the gloomy outlook of the U.S. economy, gold did not advance to a new high. Now it looks weak and is reversing the trend.
That makes us near-term bearish on gold as quantified by the score on the right hand side. If prices fail to hold the $1,500 an ounce, the downtrend in gold prices is confirmed. Will the gold market crash? No need to panic as the fundamentals indicate a weaker dollar and a higher gold, mid- and long-term. A correction can be healthy for gold; as Rogers say, it ensures the gold bull run stays intact. QE3 is on the horizon but needs to see some negative economic data to come out. U.S. debt is hiding behind the Greek chaos but sooner or later needs to be dealt with. James Bullard says a U.S. “technical default” is the biggest risk to the world economy.
Source: http://seekingold.com/index.php/gold-price-trend-and-forecast.html
