I am just returning from a short trip and am unable to put together much of a commentary on today’s market action so please reference the chart for the technical picture. I do want to note however that the HUI is trading above the 100 day moving average, a significant technical achievement. The XAU has not quite mustered the strength to best that level but the session high from yesterday and its current session high is right on that level so it is attempting a breakthrough. Should both indices manage two consecutive closes above that level, especially with the 10, 20, 40 and 50 days all turning higher, it will be difficult for even the most die-hard gold bear to argue against the move.
The fact is that the US Dollar’s horrendous fundamentals have caught up with it. The bear market rally caught a tremendous amount of speculative longs on the wrong side as the bottom fell out of it. We have remarked in the past that the rally in the dollar had NOTHING to do with fundamentals or safe haven buying as the talking heads in the press would have you believe but was rather the effects of a short-lived but massive repatriation of investment funds from abroad by US based hedge funds looking to deleverage, cut losses and meet margin calls and redemptions. I am particularly interested in what it is going to do after the new year begins as that will be the key to many other markets.
Click chart to enlarge today’s action in Gold as of 12:30pm CDT with commentary from Trader Dan Norcini