On the other hand, Sharps Pixley market analyst Shamik Bhose points to the maintenance of the $1,525 support level in gold (now thrice tested) as being pivotal for the yellow metal. We have, several times, also mentioned the same value zone as being singled out in many an Elliott Wave analysis as being a critical one to have to hold. The analysis notes that “gold is in a downtrend now. It’s been in a downtrend since September . It edged lower in March and April, but that downtrend has suddenly accelerated in May and now the moving averages are all sloping down.”
Shamik Bhose also remarks that gold’s 252-day moving average has been broken only once since 2001, and that was back in 2008. Over the past few weeks however, that same breach has once again manifested itself and that is why, if and when $1,525 is taken out on the downside, we may look for $1,400 or perhaps even $1,250 gold, where “even in the worst-case scenario, I would hope for us to find a bottom.”
Currently, Sharps Pixley asks the rhetorical question “Can Fear Refuel the Investment Demand for Gold?” Well, perhaps not fear just yet; just the never-ending hope that the Fed will launch a QE3 and give the easy money junkies their much-awaited fix. Yesterday, the story that Boston Fed President and major dove Mr. Rosengren encouraged the Fed to go “all out” with a massive and open-ended QE3 made it into “heavy rotation” on the hard money sites. Albeit Mr. Rosengren is not on the FOMC this year, and will not call the decisive shots, commodity bulls appeared to cheer his suggestion with abandon. Dallas Fed President Fisher called Mr. Rosengren’s recommended steps as nothing more than a “mistake” to be avoided so close to the Presidential election period. Others prefer to focus on the fact that the US is approaching the “fiscal cliff moment” in January and that any Fed action notwithstanding, that railroad crossing is far more important to watch. Base jumping, anyone? Some say so.
Spot silver fell 30 cents to near $27.75 and platinum dropped $8 to $1,395 the ounce. The decline in palladium was only about $2 and the noble metal was quoted at $581 per ounce. Sister metal rhodium showed no change at $1,170 on the bid. Background markets showed the euro at $1.234, crude oil down 50 cents to $93.18 per barrel and US stock index futures tilted lower after the aforementioned weak data came out of the EU’s economic engine.
The markets are also gearing up for the release of a slew of Chinese economic data on Thursday and Friday. For the time being, what is already known is that the country’s economic engine is showing lower RPMs already. Freight volumes are down by 2.4% year-on-year and by 8.6% on a month-to-month basis. The metrics are undeniably bearish for industrial commodities as they underscore feeble underlying demand. Copper, iron ore, aluminum, and platinum are at risk from such weak readings.