1Thursday, December 17, 2009

Gold Enjoys a 10% Bath Following Strong US Data and Weakness In Euro-Region

On Wednesday ahead of the FOMC announcement I noted that "some gold bulls are chomping at the bit.The 240 minute gold chart gapped almost $2 at 12:30 pm cst this afternoon. The pattern off the lows arestill reflecting bearishness, so wannabee bulls have to tread cautiously. It will take a decisive breach of 1170to put the bulls back in a position of strength."Gold failed to even breach Friday’s stronger than expectedretail sales high at 1143.On Wednesday, Greece sold $2.9 billion of bonds. Then, after their markets closed, S&P downgraded theircredit outlook and put them onto a "negative outlook." Neither the credit rating agency nor marketparticipants believed that Greece had a "credible plan to bring borrowing down from 12.7% on NationalIncome this year to below the eurozone limit of 3% by 2013."Finance Minister Mr Papaconstantinouclaimed that"there is a lot of will to do whatever it takes to bring down the deficit."The markets were notconvinced. The Euro plunged roughly 1.5% and plunged more than 3.5%. The upside is that both the Euro