Gold Declines with Risk Aversion

30 October 2009 @ 03:20 pm EDT

Gold had a nice little pop yesterday as investors exited the Dollar in reaction to stronger than expected U.S. Prelim GDP data. However, as with the EUR/USD and GBP/USD, gold's positive momentum fell short of important topside technical barriers, mostly notably $1050/oz and our 3rd tier uptrend line. Investors are now exiting their risk trades today as optimism wanes in the face of negatively mixed data. The S&P futures are also trading off by over -1% and crude over -2%. Gold is following its positive correlations to a tee today and is heading back below our 2nd tier uptrend line. Hence, markets are showing us that investor uncertainty is outweighing optimism. The positive Q3 earnings season has been priced in, and investors are now looking towards Q4 fundamental economic performance.

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