Hourly Action In Gold From Trader Dan
Posted: Apr 06 2010 By: Dan Norcini Post Edited: April 6, 2010 at 1:49 pm
Filed under: Trader Dan Norcini
Dear Friends,
Fears involving Greece and some other nations in the Eurozone returned overnight and continued in today’s session derailing the European currencies once again and knocking the Euro below the 1.340 level. It appears from a technical perspective that traders are watching for rallies as further opportunities to short the currency. The result was a move higher in the Dollar pushing it back up and away from 81 on the USDX.
Impressively enough, that did not seem to bother gold as it was able to actually bounce upwards off the $1,130 level instead of dropping back within its containment box in spite of Dollar strength. This is interesting because earlier in the session crude oil was also higher in the face of Dollar strength as were some other commodities such as the grains, cotton and copper as well. I mentioned yesterday that it appears the nearly direct link between Dollar performance and commodity performance might be weakening. Today’s action is tending to reinforce this. It translates into the fact that managed money wants to own commodities right now irrespective to some extent of what is occurring with the Dollar. What this means for gold is that further upward progress in conjunction with a higher dollar will move it higher in terms of various other foreign currencies at a faster pace. It does not mean that the link with the Dollar is not vital – it assuredly is – but it means that the general commodity world will not be at the direct mercy of the Dollar on a day by day basis. It is unclear what the reason behind this is right now but it might be related to the extreme valuation of the equity markets and the relative value of commodities by comparison.
Along that line of thinking, Euro gold set a brand new all time high of €847.233 at the London PM Fix while gold priced in British Pound terms was fixed at £746.704, not far off from its all time high. It is going to be difficult for the perma bears at the Comex to keep up the pressure on the yellow metal if it continues making all time highs in terms of the European currencies.
Gold still needs to take out that previous swing high near the $1,145 level to kick off an upside trending move. It will also help things out if the HUI can take out the 435 level on a close simultaneously. That would have the gold world firing on both cylinders. When we get days like this in which the HUI struggles to move higher, it tends to knock the props out from under the Comex gold bulls. Let’s see how the HUI fares today and tomorrow.
Gold’s fade going into the close is a bit discouraging but it did manage to stay outside of its former trading range and get a second close above the critical $1,130 level.
DAN'S CHART:
http://jsmineset.com/wp-content/uploads/2010/04/April0610Gold.pdf
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