DAN NORCINI'S FRIDAY COMMENTS

Hourly Action In Gold From Trader Dan

Posted: Mar 19 2010 By: Dan Norcini Post Edited: March 19, 2010 at 1:50 pm
Filed under: Trader Dan Norcini
Dear CIGAs,

Currency traders continue to fret over developments in Europe concerning Greece with the result that they unloaded on the Euro, the Pound and the Franc again today. That sent the Dollar moving up to the top side of its range trade as it once again pushed above 81 in the USDX.

The Pound was hammered lower on affirmations the UK will continue with its Quantitative Easing program for some time.

The result was that gold was knocked back from the top of its range trade and fell down to the bottom again. The bullion banks have been playing a game of “Whack a Mole” with gold every time it nears the $1,130 level. It appears that for today some of the more short-term oriented bulls ran out of patience with the metal and dumped their holdings. Some of this pressure was related to news out of India regarding a hike of 25 basis points (1/4%) in its key borrowing and lending rate. The thinking, totally unfounded in my opinion, is that would reduce gold demand from the subcontinent. Strength in the Indian economy, which precipitated the hike, is always good for the gold market.

The Euro has been finding buyers on any approach toward 13450. That will need to continue if the Dollar is going to remain in its trading range. Failure by the Euro at that level and the Dollar will be able to break above 81.50 giving it the potential to make another leg higher. A lot can happen over a weekend so we are going to have to wait until Monday to see more clearly into the crystal ball.

One thing we can say however is that currency fears out of Europe will keep gold well supported in terms of those particular currency prices. Gold priced in terms of the British Pound actually rose at today’s PM Fix coming in at £736.754 with Euro priced gold continuing to remain above the £800 level. This should continue to provide downside support for the metal in US Dollar terms with buying coming in once again near the $1,100 region.

The Dollar, while stronger today and putting in some nice gains, still cannot seem to muster the energy needed to break out of its range between 81.50 and 80.

After going nearly vertical the last 3 weeks, the S&P 500 set back some today. That, plus weakness in the gold, contributed to selling in the mining shares as the HUI fell back down towards the bottom of its recent range trade. It has not been able to muster sufficient strength to take out the top side near the 430 – 432 level on a closing basis. Thus far it has seen buying on dips down towards 405.

Crude oil is sharply lower giving back most of the gains of the week but so far it remains above the $80/barrel level. It is also stuck in a trading range that has been ongoing since December of last year. The bottom is near $70; the top is near $82. Crude oil will have to take out $84 to start an uptrend. A downside breach of 81 will confirm the range trade is still in effect.

DAN'S CHART:
http://jsmineset.com/wp-content/uploads/2010/03/March1910Gold.pdf