Monday, July 12, 2010

GOLD Trend - Momentum is Fading

GOLD has been actively watched in the last months as it has been making new highs and touted as the ultimate Inflation protection vehicle. Inflation is not easy to find right now as several measures of the monetary velocity show a deflation threat is still intact and FED seems reluctant to signal end of QE with dismal Industrial Production data released a week ago.

Technically speaking GOLD tested the Trend line Support below 1200 and is now reaching a confluence of Resistance levels: the former Dec'09 Close and Open around 1216 and the 50-Day MA sitting on the same level. The Momentum since the May '10 top is fading and we could see how the Labored move failed with a volatility break which is a good signal of a possible Trend change. ADX has already given a Short signal.

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