Global Macro Commentary

One interesting observation I made this week is: dollar down and gold down at the same time. If you also take into account the heavy sell-off in treasuries, the likely explanation of this week’s erratic moves is: anti safe haven (i.e. no more fear or uncertainty in the economy). So is the worst over? It’s very hard to tell at this moment, but what matters most is that, at least for now, markets have less fear/uncertainty relative to early March. Of course, this doesn’t mean the bull market for gold is over; there’s still currency debasement (the real catalyst for long term gold). But as long as safe haven trades are being liquidated, gold will remain under selling pressure. There will be no significant data releases next week, so it will be important to see how the market digests everything that’s out there on the table right now and determines a direction: fear or no fear.

Taking a quick look at gold technicals, it is quite obvious that gold closed the week below the Nov08 trendline. Note, however, that gold is also sitting on a pretty serious level that has acted as both strong resistance and support for quite some time. Whether this level holds or not will determine whether the break below the Nov08 trendline is a fakeout or not. I understand that directional trendlines are important, but I think resistance/support levels are equally, if not more, important. One great thing about trading futures is that, because it’s a 24-hour market I can reposition my PA as early as Sunday evening, so it looks like I have some restrategizing to do over the weekend.

Gold spot: 7-month

Gold JUN09: 6-month (another look at the support line)