The China [Price] Factor

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Next week will tell more, as these ideas get to be aired at hearings in Washington. Surely, we will hear from more than just the senator on this topic. It is juicy enough, to say the least.

Although it was not apparent today as yet, any meaningful breakdown in crude oil prices could take gold down to near recently visited support levels. However, the next three trading sessions will continue the exhibit the nervous anticipatory patterns we have become accustomed to in previous pre-Fed meeting periods. We also expect that Q2 writedown prospects for Citigroup will rekindle enough safe-haven buying to mitigate at least some portion of the potential losses that an oil correction could trigger. A close above $900 spot this evening will certainly be commendable, but at the end of the day, gold needs to recapture the $945 area before higher confidence levels are seen among participants. There is work to be done, therefore.

Happy Trading.