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Gold Trading in Volatile Range

James Hyerczyk from ForexHound.com at 10/23/09


December Gold is trading unchanged after trading as much as $10 higher and $8 lower. Gold traders ran this market higher early in the session, most likely because of the weakness in the British Pound. At this time the Dollar was strengthening. When the buying dried up, traders were quick to take profits, sending it sharply lower for the day. Shorts couldn’t break this market and the market rallied back to unchanged. It looks as if distribution is taking place when means a break to the downside. Help from a stronger Dollar is needed, however to trigger an acceleration to the downside.

The U.S. Dollar is trading higher against most major currencies. The biggest loser is the December British Pound which is under pressure because of a lower than expected 3rd Quarter GDP number. The December Euro has traded both sides of $1.50 while trying to establish support there. Traders seem reluctant to get aggressively long at the current level. Lower oil and equities is contributing to the weakness in the December Canadian Dollar.

Stock traders are ignoring stellar earnings results from Microsoft and selling this morning. The technical picture in the December E-mini S&P 500 is beginning to look bearish. A close below 1082.00 today will form a closing price reversal top which will be an indication of the start of a possible 2 to 3 week break to at least 1056.75.

December Treasury Bonds and Treasury Notes are trading weaker. Most of the pressure has come from traders adjusting positions ahead of next week’s Treasury auction. Traders expect investors to ask for higher yields. The weaker equity markets helped the Treasuries erase some of their earlier losses. A sharply lower break in the stock market late in the day is likely to trigger a rally in the T-Bonds and T-Notes.

December Crude Oil is trading sideways to lower. Weak equity markets are helping to keep a lid on this market after an early attempt to break out over $82.00. The short-term supply and demand picture remains bearish, but speculators have been driving this market higher because of the outlook of an improving global economy. Higher stocks and the lower Dollar have been supportive which means a reversal in these trends will weaken crude oil.

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