Commodities | Oct 18 2012
The interesting aspect to this is whether or not the market will perceive the move in the CPI as inflationary and therefor there is a need to cover this risk with gold or just because we have the flickers of growth coming through that investors will remain positive towards the equity markets and therefore demand for gold via ETF will remain strong. Remember we have been on record highs for the holdings in ETFs. The demand for gold via ETF seems a solid strategy as it potentially covers optimism associated with the share market and optimism created out of inflationary pressures.
We have continued to scale back our long positions and can suggest that this remains the best call for the foreseeable future, however be careful of when the optimistic rally in the equity markets we have been experiencing will spill over into gold via demand from ETF. The bullish call we have had for so long does remain in play, however we may get a better opportunity to buy.
Our play to shut down a lot of our long positions opting for the security of the sideline remains in play.
Chart point:
Both calls on gold and silver have been accurate with gold trading to US1730 and silver trading to a low of US32.60, both levels well beyond the targets we had expected. Still we need to watch the levels of US1800 and US35.20, as these two levels of resistance need to be respected. Momentum indicators on both continue to be bearish, however it will not take too much to turn these around. If so then the sell-off is complete and we are back on a trend higher.
Gold
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