Gold Market Surges after Breaking Resistance

December Gold is surging to the upside after breaking through technical resistance areas. For weeks this market has been holding at a series of retracement levels inside of a range. The inability to break this market during the stock market rally in July and August was a sign that speculators were supporting it. Rumors this week that a major bank was in trouble may be the trigger for today’s rally.

The U.S. Dollar is trading mostly lower this morning under thin trading conditions. Strong moves are taking place in both the September British Pound and September Japanese Yen. Trading has been light as investors even up positions ahead of this Friday’s U.S. Non Farm Payrolls Report. Tomorrow the European Central Bank will hold its monthly meeting. This could be contributing to the two-sided trade in the September Euro.

Things have calmed down in the U.S. equity markets after yesterday’s sharp sell-off. The inability to follow-through to the downside encouraged shorts to cover and attracted new buying. The September E-mini S&P 500 chart pattern suggests a possible rally to 1014.75 before encountering new selling pressure. Conditions could get volatile as volume is light and some major players are absent ahead of Friday’s Non-Farm Payrolls Report. This afternoon’s FOMC minutes could move the market if it reveals more information on a Fed exit strategy.

Treasury futures are trading better this morning despite the rise in equity prices. Traders may be buying bonds in anticipation of a breakdown in equities or on the rumors of a major bank being in trouble.

Published on Wed, Sep 2 2009, 18:17 GMT