This morning we focus on the Gold futures market. We notice that gold has broken out of its three-month trading range and now the former resistance level of $1,650 has turned into a key support level. Interestingly, gold still has not broken out of its downward trend channel starting with the highs of November 2011 and February 2012. Shorter-term trendline resistance should come in at around $1,775. The double-top formed approximately 12 months ago at $1,935 is of course a major level in the gold futures market, and we believe that gold might take a lot longer to get there than some analysts believe. For now we watch the major support level at $1,650 and anticipate the rally to continue to trendline resistance at $1,775. The February 2012 high of $1,800 is the next major target for this market.
Overall, commodities are a huge story this year as various media is reporting hedge funds adding to their commodity positions in anticipation of the overall commodities rally continuing. Our opinion is that the grains market is really the last true commodities market in the world. The grains market is truly driven by clear fundamentals, clear supply and demand. Oil supplies are controlled, and thus the market is manipulated, and precious metals prices are purely driven by fiat money liquidity. Thus we see gold and silver rallying in anticipation of global QE (not only Bernanke, but now Draghi is pledging unlimited bond-buying firepower to endeavor to save the Euro from acute crisis and even collapse).
