Gold action for the week ending the 12th of May 2007 was certainly a battle won by the short sellers. Restricting the Comex Gold Futures Contract from punching through the psychological 700 level which will certainly open the flood gates to bigger and stronger things to come where Gold is concerned..
With heavy selling driving Gold down to the .50 Fibonacci level of the last run up, forming a minor two day double bottom where buyers will be looking to hold for another possible attempt at the 700 level.
Despite the heavy selling during the week Gold still looks strong making higher lows on the Comex Gold Futures Continuous Contract weekly chart. Gold has also major support coming from the “up-trend line”.
So the coming weeks battle will be one of great interest as the ‘war’ continues between buyers and sellers. Lest we forget “Central Bank” selling will become old news soon enough ‘demand’ takes Gold through the 700 level.
As has been mentioned on many occasions Gold and the U.S Dollar have a ‘inverse’ relationship thus it was no sup rise to see the U.S Dollar rally on the back of Gold selling.
Currency traders saw the U.S Dollar break the .50 Fibonacci level re-testing the series of lows and the .618 Fibonacci level but could not sustained the rally and closed below the resistance level for what may become a defining moment in the immediate outlook for the U.S Dollar.
Should the U.S Dollar not maintain its upward thrust the series of lows at the .8113 level will be tested as will the .8035 level.
However should the U.S Dollar continue its upward movement overhead resistance at .8297 and .8319 could be the stumbling block for the U.S Dollar remembering that we are in a long-term “bear” market concerning the U.S Dollar which can be easily appreciated when studying the weekly or monthly chart.
Both charts clearly illustrate Mr. Sinclair’s point of view that the U.S Dollar and Gold have an inverse relationship and longer term charts which we will explore at a later time clearly show the U.S Dollar in a “bear market” and Gold in a “bull market”.
Everything else is just noise …
