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Tapered Expectations

Long constrained between $1,180 and $1,300 an ounce, gold has finally broken out on the upside, only to find itself trading within a new, albeit higher, range. Gold now enjoys a "floor" of solid support at $1,300 with initial support kicking in around $1,340. On the upside, initial resistance kicks in around $1,385 and continues up to the psychologically important $1,400 level - but, as outlined below, this "ceiling" could prove vulnerable in the weeks ahead. ...

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A Quick Note on Inflation, Unemployment, and Fed Targeting

There was a time when price stability and well-behaved indicators of inflation would send gold prices lower.  After all, many investors and savers typically buy and hold gold as an inflation hedge.  With little inflation in sight, prospective buyers would not be expected to stock up on the yellow metal . . . and some might even wish to reduce their bullion holdings. Uncharacteristically, today’s (Tuesday's) news that U.S. producer prices were flat in July sent gold prices up more than $12 an ounce in New York trading. ...

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Gold Market Update

Although continued “uncertainty” and “caution” remain the gold market’s watchwords, the odds favor further gold-price recovery in the weeks and months ahead -- despite continuing attempts by large-scale speculators and institutional traders,  driven by computer models and momentum indicators, to knock gold prices lower. For the moment, we believe gold prices are still in a “bottoming phase” and may have more work, technically speaking, around recent levels before breaking through overhead resistance and moving substantially higher.   ...

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Gold, the Economy, and a Whiff of Stagflation

It was only a matter of time before gold prices broke through overhead resistance at the technically important $1,300 an ounce level.  Now, $1,300 - plus or minus a few dollars - may be the new floor . . . and it looks like $1,350 may be the new ceiling. ...

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Fed Policy: A Quick Note

At this morning's presentation to the House Financial Services Committee, Federal Reserve Board Chairman Ben Bernanke said reductions of the Fed's bond-buying program, known as Quantitative Easing or simply QE, is "by no means on a preset course" and that the Fed could leave the program intact-or even increase purchases-if warranted. Most Fed watchers and financial market participants -- including many gold traders and investors -- are betting QE3 will continue with monthly asset purchases of $85 billion for another quarter or two before a gradual reduction and winding down of the current ...

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Suffering Gold

Gold continues to suffer under a cloud of bearish expectations.  Its price has been trending lower for some 20 months now - and, at recent lows, it is off some 30 percent from the September 2011 all-time high of $1924. A growing number of investors, analysts, and journalists are already writing obituaries for the decade-long bull market and foresee only a grim future for the yellow metal.  These naysayers, most prominently economist Nouriel Roubini who gained some renown for predicting the financial-market debacle of 2008, point to a number factors to support their bearish ...

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Captive Gold: A Quick Note on the Current Market

For now, gold remains captive to the flow of U.S. and global economic indicators and prospects . . . especially those that may influence Federal Reserve monetary policy. With the U.S. economy far from a satisfactory and self-sustaining recovery, the news is likely to become increasingly positive for gold -- with diminishing expectations of imminent "tapering" (that is scaling back the Fed's monthly bond-buying program) eventually replaced with talk of additional monetary stimulus of one sort or another. Home in the Range At the moment, however, gold appears range-bound between $1370 and ...

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GOLD: A Quick Note on Fed Policy

Gold prices moved higher this morning in anticipation of Fed Chairman Bernanke's testimony today before the Joint Economic Committee. Recent speeches by other Fed officials in the past few days suggest the Fed will leave the door open to stepped-up quantitative easing should the economy falters or if inflation remains below target. Any talk of more QE from Bernanke this morning could give gold enough juice to re-test overhead resistance around $1400 . . . and possibly move higher. See my recent posts on NicholsOnGold.com for more on Fed policy and the economy. ...

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GOLD — What’s Going On?

Gold prices have caved today under pressure from dollar appreciation and wave of technical selling at key chart points - selling aggravated by continued flow of funds from gold (and commodity indexes) to equities. Just as the rising price trend in the equity indexes has attracting more buying, the renewed downward momentum in gold is engendering short sales and more outflows from gold ETFs. Importantly, program trading and other technical strategies have added to the downward pressure on gold - and continue to do so.  (See my previous commentary posted earlier today for more on program ...

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Dark Pools, Program Trading and the Decline of Gold

Day after day, gold trading has been, and continues to be, dominated by institutional trading in the "dark pools" where over-the-counter dealer and interbank activity goes largely unseen. Don't under-estimate the influence of trading in the dark pools where "invisible" institutional trading can - in a flash - knock gold to the mat, leaving most gold-market participants and observers wondering what happened. Indeed, much of this activity in the interbank and dealer market goes unreported - but buy-sell transactions, high-frequency, and other program trading in these dark pools, often at ...

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