Another Wild Ride….
This week the December Globex Gold contract covered a mammoth $65.00 range as economic data injected extreme volatility and uncertainty into the market place. The global economic climate is certainly very fragile as the FOMC's recent "quantitative easing" has caused hostile reaction from Financial Ministers at the G20 summit.
The general feeling from the G20 is the U.S. is pushing the global economy toward inflation with it's policy to print more money through June 2011 in an attempt to kick start the sluggish economy and hopefully allow business to expand and create jobs….. They have suggested anytime you print more it is worth LESS….
During this week we have also notched another all-time high…($1424.30)
On Friday 11/12 the Gold market experienced a $50.70 range and settled at $1365.50…($37.50 lower on the session)…. This avalanche sell-off was fueled from rumors that the Chinese Banks were looking to RAISE rates again…. in order to curb it's inflationary concerns…. This may be seen as rebuttal to the FOMC's quantitative policy… Also it may be seen as tool to push Gold prices lower in order for the Chinese to purchase bullion lower. The Chinese financial officers have certainly declared their interest to build their Gold reserves to the levels of the United States…..
ONCE AGAI it will be very interesting to see if this significant sell-off will bring a strong demand for physical bullion…
NOTEWORTHY WEEKLY NEWS:
Reports that World Bank President Robert Zoellick is suggesting the world go back to some type of Gold Standard certainly helped fuel the rally early. this would require central banks to increase their Gold reserves to support their fiat currencies….. This would mean huge amounts of Bullion would have to be purchased… It is my opinion that this will not work simply because so many nations are printing monies to help their economies spend their way out of economic crisis. However, anytime the tern "Gold standard is mentioned especially from a prominent figure such as Mr. Zoellick the Gold trading community is certainly going to react.
More bad news from the European union as the debt spread in Ireland appears to be widening…Chances are the Irish Banking System may be in worse shape than originally thought….. This is prompting savvier investors from the Euro Region to buy Gold as a "safe haven" investment….. Chinese government officials are continuing their criticism of the "loose" monetary policies abroad, particularly the recent "quantitative easing" policy revealed last week from the FOMC….
The Peoples Bank of China revealed today that as of November 16th it will raise the commercial bank reserve requirement by .50 basis points… This helped fuel the sell-off today as anytime you mention Central Banks raising rates Gold and Silver will usually tumble…However, the Chinese Trade Surplus reading is the second highest ever on a monthly basis….This is an indication that the Peoples Bank of China may be looking to increase their Gold reserves…
The CME Group (The World's Largest Futures Exchange) sent letters to member firms and others on Tuesday stating they would be raising the margin requirements for trading Silver…..The increase was significant enough to force traders to sell / profit take to meet margin requirements…..
Department of Labor released better than expected Initial Jobless Claims data showing first time claims to be – 435,000 better than the projected 450,000. Also the U.S Balance of Trade was a deficit of $44 Billion…This was expected to be a deficit of $45 Billion……
MONDAY 11/15 SWING NUMBERS / DECEMBER GOLD
RESISTANCE # 2…………………$1429.00
RESISTANCE # 1…………………$1397.00
SUPPORT # 1……………………..$1346.00
SUPPORT # 2……………………..$1327.00
Mike Daly / Gold Specialist
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