Video-July-09-2013-Archives-Daily-Show
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Inflation In China...
Not even a wildly rising dollar could scrub all the luster off today's strong jump in gold prices. If the dollar had politely stayed put, gold would have been up about $19, but dollar strength quashed that to a rise of around $13.
Developments today overseas drove gold, one of which should give us special pause. China's consumer inflation rate for June jumped to 2.7% on an annualized basis after being right at target in May (2.1%). Experts knew a jump was coming but had forecast a 2.5% rise, which obviously was an underestimate.
Inflation is an insidious force. Often it is not comprehensible, often beyond the long, sniffing nose of the economic bloodhounds. If these figures were coming out of a highly-developed, democratically-run country, like the United States, we would say that inflation is just beginning. However, in China, by fiat, a committee may implement policies overnight that can push inflation down. How soon it can turn around, though, is a matter for another kind of speculation. It is, after all, already the second week of July.
The Chinese inflation issue bears watching.
The other overseas news item affecting gold is the coup and aftermath in Egypt. We think Egypt will probably muddle through its crisis sooner or later with some bloodshed but not a full scale civil war. We have to keep our eye on other Middle Eastern countries, primarily Libya and its oil stores, but Turkey emphatically, because that member of NATO and almost-member of the E.U. has a long history of counterrevolutions and intervention by a secular military. While Islamism may please roughly half the citizens of both Egypt and Turkey, the other half is terrified of it. And angry at having their secular privileges threatened. That's not a prescription for stability.
As we've said on other occasions, the U.S. has become freer from Mid-East oil shocks, but in a global economy, a threat to Europe's oil supply would affect us all.
Physical demand is somewhat of a conundrum in the last few days. There has been serious gold purchasing in China both by public buyers and private ones. However, India continues to be stagnant because of the import tariff and quotas imposed by its government on gold. The wise probably had stocked up before the imposition of the second-round of what has become a punitive tax. These sorts of moves make India appear to be a dubious trading partner for many countries in many sectors. You can't be a forward-looking modern capitalist economy at the same time you are mired in the thinking of the Mogul Empire.
Deutsche Bank, although it hasn't changed its gold price target yet, said the gold correction may just about be over.
Wishing you as always good trading,
Gary S. WagnerExecutive ProducerMarket Forecast:Today’s nice upside rally offers investors and traders to insightful and valuable technical pieces of information. First: today’s rally failed well below 1265, which is our initial target to provide us with technical evidence that a strong rally has ensued with a high likelihood of continuing in an upward direction. Secondly: today’s rally did provide gold prices with a higher low. Therefore we are beginning to see the basic range of gold compress. That of course is indicative of a higher low and a lower high. Again we see strong resistance at 1265 with critical support at 1200. . Video archives:http://thegoldforecast.com/video/april-2013-archives-daily-shows http://thegoldforecast.com/video/may-2013-archives-daily-shows
Proper Action: No current position
COT LINK See previous weeks in Historical Commitments of Traders Reports. |
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Gary S. Wagner - Executive Producer