Morning Futures Roundup

Quiet Gold Market

   Fundamentals
Gold futures have failed to make new contract highs, largely due to economic uncertainty and a firmer US Dollar. The rally in gasoline prices, while inflationary in the near-term, could be seen as a growth-killer for the state of California, the largest US state. The state has suffered the brunt of the collapse in home prices, and the state government is not exactly the model of solvency. This has left the economy there in an extremely fragile state, making the spike in prices at the pump all the more painful for consumers.

In Europe, Spain has avoided having to be bailed out, somewhat lessening the appeal for Gold as a defensive play. While Spain has avoided the worst-case situation, some nervous bond traders have quietly been accumulating US Treasuries and lessening European debt exposure. This has stabilized the greenback.

   Technical Notes
Turning to the chart, we see the December Gold contract trading near the 1800 level for the third time this year. Prices, however, have failed to break through the level each time. Failure to do so this time around could have a substantial negative impact on traders' psyche. In addition to trading up to 1800 and failing to break through, the negative divergence between prices and the RSI indicator can be seen as bearish. The indicator has drifted lower since mid-September.

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About Mike Zarembski

Born in the grain pits of the Mid-America Commodity Exchange (MidAm) in the early 1990s, Mike's futures career soon shifted to the offices of TD Waterhouse in 1999, followed by Xpresstrade in 2002 and eventually optionsXpress in 2007.