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Gold Trading Analysis 12 Aug 2010

spot gold

Having been stuck between the 40 and 9 day moving averages for the past 2 days resulting in and identical pair of long leg doji candles the spot gold price finally broke out today pushing above the $1200 per ounce price handle in the process.  The breakout is hardly surprising given Tuesday’s FOMC meeting which basically confirmed that the FED will continue with their version of quantitative easing in an effort to stimulate the economy.  This has resulted in a rush to Treasuries and a return to strength for the US dollar.  Under normal circumstances dollar strength usually results in a fall in commodities which has happened n the case of crude oil, but the rise in gold along with the US dollar should be a cause for concern given that the last time it occurred was at the height of the banking crisis and Lehman collapse.

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