Yellow and Black Gold are starting off on the weak side in early action as prices retreat from the big moves to the upside of yesterday (gold) and Wednesday (oil). Gold peaked at $925.5 just before the US open yesterday and then drifted for the rest of the session all the way back down and we are now calling the Gold Spread at $910.3 - $910.8. Dealers are trying to fathom which of the two spike moves (the one lower on Wednesday or higher yesterday) will prove to be the forecast indication to watch.
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Gold Spread Betting, 31 Jul 08
Gold has had one of its more exciting 24hrs dropping straight through the support levels mentioned in yesterdays comment between $912 - $914 and dropping $20 in the next few hours down to $892 before turning straight back round again such that we open this morning back above that very same $914 level. Capital Spreads Clients spent most of the day underwater continually buying on any falls but have now been rewarded for their perseverance. The problem is that the support is still there to be attacked and a second break might not be helped in quite such a robust fashion.
Gold Spread Betting, 30 Jul 08
Gold has also come in for a bit of a battering in recent days and with the bounce in equities (once again) and the small strength in the dollar the bears have been able to force the pace. If the perception over the long term return for the yellow metal begins to change then the price could fall a very long way indeed. We need uncertainty to drive investors into buying but at the moment the price is proving a little high to tempt further position building.
The main fact is that even the truly horrendous stories out of the Financial sector over the past few months (at one point even Fannie Mae and Freddie Macs existence was being called into question) failed to create a new high. At the current price of $916 we are still seeing strong buying from clients looking for a bounce after the recent drops. Support is just below here between $912 and $914 so there is a possibility of some strength but if we fall under the $912 mark then bears will be targeting the $875 region.
Gold Spread Betting, 28 Jul 08
Gold closed last week down -$35.55 at $921.65 (down -3.71%)
Gold Spread Betting, 25 Jul 08
The resurgence of the bears has given Gold its chance to recover some of the losses of earlier in the week but the move appears to be more of a knee jerk “the markets are falling so buy precious metals” rather than anything else.
Gold Spread Betting, 24 Jul 08
Yesterday’s activity was heavily dollar focused with the rally in the Greenback causing further decays in dollar priced commodities. As mentioned yesterday Gold was looking a tad weak and the price action throughout the session bore this out with a $30 fall to $918 by the close. This morning there has been a bit of buying from the Far East and we are back up at $925 which will be something of a relief for our Capital Spreads Account holders who have been resolute buyers throughout the recent drop. In the longer run Gold looks over valued at current levels IF you believe that the current financial woes might be playing themselves out. The problem is that it is unlikely to be that easy for the world economy and there is a strong likelihood of several buried bodies being found before the lid can be closed on this episode.
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Gold Spread Betting, 23 Jul 08
Gold has also had something of a brick wall moment having flirted with the $1000 level early last week when hitting a high of $989. The Gold spread betting market is now down at $939.4-939.9 and longs will be hoping that this is just a pull back scenario in the current bull move. We moved higher so quickly that there is not much recent volume levels to pinpoint but well below here at $929 would seem to be crucial to maintaining a move higher. If the banking sector is in the process of crawling out of the wreckage then the argument for gold begins to look very weak indeed. In the end Gold is just a pretty, useless, yellow lump of metal. Too valuable to actually use for anything and costly to own. In times of trouble it has safe haven value but in good (or even just slightly bad) times of little worth as a long term investment.
The recent weakness in Commodities has been dollar related to some extent as the greenback has had something of a bounce in the last few days but the problem for commodities is that they are in high territory for two reasons (weak dollar and supply). If either of these reverses then the fall out could be spectacular.
Gold Spread Betting, 22 Jul 08
The continued winner remains Gold as punters begin to run for cover once more. A surge in Gold might give rise to fears that the same cycle that occurred late last year and in Q1 08 might repeat itself with investor piling out of assets into precious metals and cash. With the dollar continuing to pressure its lows the fear of another lurch to the downside for the greenback is on the minds of many players. The huge Treasury issuance programme continues unabated and if the buyers from Russia, China and the Middle East start to rein in their purchases the dollar might well have a trying time of it. On the other hand the buyers are in a cleft stick themselves in that if they overtly abandon the Treasury Auctions their own holdings would reduce in value quite significantly. When these holdings are in the Trillions it does not take much to wonder whether the dog is wagging the tail or the tail the dog.
Gold Spread Betting, 21 Jul 08
Gold closed last week down -$6.60 at $957.20 (down -0.68%).
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Risk Warning: Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
'Gold Spread Trading July 2008' by DB, updated 01-Aug-08
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