081614 Whew!

Model Portfolio: Short Signal (7/31)

CTM081614

 

Technical Read:  Spot gold dropped through the recent 6 day trading range but rallied back into the channel by the end of the day. However, GLD (which has a longer US trading day) was not able to regain its footing. Friday’s trading indicates that gold is becoming susceptible to down drafts.

Backdrop:

  • The US Dollar index was soft on Friday as well but showed relative strength versus gold. This is bearish for gold.
  • The latest chapter in the unfolding Ukraine story now revolves around a caravan of supply trucks Russia is trying to insert into the Ukraine. This is less scary than some of the previous stories. Bearish for gold.
  • The US Commerce Department reported that retail sales flat lined in July (June readings were not very strong either). Remember, if a so-so economy meets a Fed getting ready to exit (to some degree) the central bank’s asset purchase program – Could a round of deflation be far behind (the interest rate market is buying this)? Bearish for gold.

GH Garrett – Veteran Commodity Watcher

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