Will Gold Breakout?

Source:

According to Jamie Chisholm of the Financial Times, gold's now staging a breakout move...Inflation, expressed through the foreign exchange market, though, seems to be the factor that buoys Mr. Chisholm's bullish spirit. Interest rate moves signaled by the U.S. Federal Reserve, he says, hold the key to gold's destiny.

According to Jamie Chisholm of the Financial Times, gold's now staging a breakout move. Traders, however, may find it difficult to take much comfort in that headline because Mr. Chisholm is hedging his bets.

Is gold headed higher or lower? Hard to tell from his perspective. Physical demand for jewelry is off and investor demand, expressed in share creations for gold grantor trusts, is flat or falling.

Inflation, expressed through the foreign exchange market, though, seems to be the factor that buoys Mr. Chisholm's bullish spirit. Interest rate moves signaled by the U.S. Federal Reserve, he says, hold the key to gold's destiny.

No surprise there, really.

Gold decided to go up yesterday without waiting for a Fed signal, but that other bellwether of inflation - oil - was pushed lower by the Chinese government's surprising decision to jack up fuel prices. These events might have cheered gold followers who've been watching the gold/oil ratio for signs of renewed vigor in the yellow metal. The ratio expresses how many ounces of gold a barrel of oil would buy at current market prices.

From the looks of things, gold hasn't quite been defibrillated yet...

Related Articles

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe