Dollar Has Minor Bounce, Gold Has Minor Reversal
(Kitco News)- Gold failed to push through the $1,212 level yesterday asthe dollar regained some strength. Dollar was up.5% and gold down .5%. With the loss ofmomentum at the $1,212 area yesterday,traders took some money off the table from gold's recent 3% bounce. Until wesee a significant change in perception, gold will continue to struggle toregain recognition as a necessary short-termhold.
With the continuous move higher in theequity space and yields finally offering returns (albeit pathetic) in the bondmarket there is no sense of urgency to participate in the gold market. Theyield differentials continue to favor the dollar. We are not in the camp of asustainable upside to the equity market and think the Fed will likely take astep back, after the September meeting, which may suggest a weaker commodityspace coming into the meeting, with a rally following the rate increase. Goldshould remain somewhat contained going into the long weekend.
We see somevolatility into Thursday and then a muted market, as the players take one lastsoak in the sun before business revs up in September. The $1,200 level shouldprovide some minor support, with $1,212 the level that may encourage the shortsto square some of their book.
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