Monday December 7, 2009 - 19:09:09 GMT
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Gold Showing Signs of Bottoming
February Gold is trading lower, but mounting a strong recovery from the low. Last night the market sold off in continuation of the recent break before finding support at an uptrending Gann angle at $1136.00. The chart pattern suggests a retracement to $1181.80 is likely.
Equity futures are trading inside of last Fridayâ€™s range by higher for the day. The weaker Dollar is providing the most support today. The daily December E-mini S&P 500 chart needs a break under1098.50 to 1093.50 to trigger more weakness. The December E-mini NASDAQ has support at 1779.00 to 1770.25. A sell-off today could send the December E-mini Dow down to a retracement zone at 10357 to 10321. The main trend turns down on a trade through 10205.
The March Treasury Bonds are trading inside of Fridayâ€™s range ahead of the start of tomorrowâ€™s Treasury auction. Although T-Bonds and T-Notes are trading higher at the mid-session, selling pressure could surface if investors begin to factor in this weekâ€™s new auction.
The U.S. Dollar is trading lower at the mid-session. This market took out Fridayâ€™s high but failed to attract the buying strength it needed to drive it higher. The chart pattern suggests a break to 75.26 to 75.03 may be needed to relieve the overbought condition.
The December Japanese Yen is trading inside of a 1.0834 to 1.1790 range. Last Fridayâ€™s break exceeded the retracement zone of this range at 1.1307 to 1.1195. The morningâ€™s action suggests that a rally back to 1.1401 - 1.1492 is possible.
Overnight, the December Euro main trend turned down on the daily chart on the break under 1.4801 but selling pressure dried up, triggering a late morning recovery rally. The short-term chart pattern suggests that rally to 1.4950 is likely before new sellers arrive.
The December British Pound is recovering after a hard sell-off last night. The break stopped slightly above a major 50% retracement level at 1.6287 and two main bottoms at 1.6258 and 1.6245. A trade through 1.6258 turns the main trend down. Look for a retracement to 1.6573 to 1.6645 before new selling hits the market. On December 10th, the Bank of England meets to discuss monetary policy. Look for interest rates to remain unchanged while the BoE leaves its asset buyback program intact.
The December Swiss Franc broke out to the downside at .9782 overnight to turn the main trend down. The follow-through to the downside was weak which means a correction back to .9925 to .9964 is possible. The recovery in the gold market is helping to provide some of the buying power. While the Fed is thinking about raising rates to stem inflation, the Swiss National Bank is still worried about deflation. This means that an intervention by the SNB is not out of the question. The situation will be clarified when the central bank meets on December 10th.
The December Canadian Dollar is trading higher, but this market is not going anywhere. At this time, it is stuck inside of a pair of .618 retracement levels at .9574 and .9364. The Bank of Canada meets this week on the 8th. Look for it to keep interest rates unchanged at 0.25%. It may address last weekâ€™s surprise hike in the number of jobs added. This may trigger a short-term rally, but gains are likely to be limited if the BoC expresses concerns about the impact of a higher currency on exports.
March Crude Oil is trading lower today. Falling equity prices, a stronger Dollar and bearish supply/demand fundamentals could put huge downside pressure on this market with a minimum downside target of 75.53 to 73.63. Today, stronger equity price and a weaker Dollar are helping to limit losses.
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