Gold Monthly Review – AUGUST 2009
Posted August 19, 2009on:
Gold’s pull back held above $900/oz and the rebound has made
steady progress, prices have twice breached resistance at $965/oz.
- Physical demand saw some improvement, but the pickup was not widespread, there may now be areas of pent-up demand.
- The dollar’s slide continues and this is a major driving force for the precious metals. Longer term, further dollar weakness looks likely.
- ETF holdings have fallen, but this may not be as negative as it first seems. Funds, however, have increased their exposure.
- Prices look well placed to rechallenge $1,000/oz and we remain bullish over the medium term.
Technical Gold Summary
Having dropped to $905/oz in early July, prices started to rebound and have made steady progress. Indeed prices have moved up through key resistance at $965/oz. This looks constructive and raises the prospect of a challenge of further supply at $990/oz, $1,006/oz and ultimately the record highs at $1,032/oz. Pressure now seems to be building up beneath the former up trend line and the retaining line which are both positioned at around $979/oz. With the 100 dma also providing support again and still generally rising, the rebound looks set to continue.
Monthly Gold Summary
Despite strong rallies in equities and weak physical demand, Gold is performing well. The dollar is under pressure and with the Fed unlikely to be able to reverse its ultra loose monetary policy any time soon, further dollar weakness is expected. This might cause wider problems for the financial markets and therefore once again raise demand for safe haven assets. Likewise equities seem to be running ahead of the economic fundamentals, so a correction looks overdue. In this environment, Gold could rise strongly into uncharted waters.