Gold Losing Glitter
By Jim Farrish | August 05, 2008 | 8:44 AM | 0 Comments
Gold has declined steadily from the high on July 15th which coincidentally was the day the bottom was put in on the S&P 500. As I write this the price of (AMEX: GLD) is $88.14 and the 200 day moving average is $87.47. The important part of that statement is the 200 day moving average which has been a key support level. Momentum is negative short term and we have signals of the ETF being oversold short term as well. This begs the question of bounce or break lower? Many analyst are calling for a bounce. While I am not ready to say not true, there is plenty of data pointing to the downside. Commodities continue to trade lower. The dollar has gained some near term strength and indicators are saying inflation is subsiding from the hot pace of the last quarter. Not disappearing, just calming some. All of this together makes the near term call on gold a roll of the dice. Too many what if’s for me to want to venture out and say definitively one way or the other. Thus, the play here would be to let the market tell you the direction. Just as we discussed with Natural Gas last week. On Monday we got the answer on that move. (AMEX: UNG) broke below short term support falling more than 8% to continue the downtrend. Watch patiently to see how gold plays out before committing money in the wrong direction.
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