Model Gold Portfolio: Short Position, (signal= Oct 1)
Technical Read: The past 2 days the GLD posted a tidy loss, equal to approximately a 33% retracement in the rally from the early October (closing) low. The yellow metal has twice now retreated from the rarified air above 120. To work off its overbought status, I would expect an attempt to challenge the lows established earlier in the month.
- Catalyst 1 – The US dollar closed at 85.93, comfortably above the recent support area (84.80). The superior growth potential in the US (versus Europe) is helping. The recent uptick in interest rates hasn’t hurt either. This is a negative for gold.
- Catalyst 2 – Stock market bears expecting a resumption of the slide were disappointed as the S&P moved to two week highs. An after-market weak earnings report from cyber retailer, Amazon, may prove a challenge in the morning. By the way, my own research is positive for big caps. This is bearish for gold.
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GH Garrett – Veteran Commodity Watcher for ConquerTheMummy.com