DailyFX released their forecast for gold, and it's an interesting call (at least in the short term).
Look for a break back below 985 over the coming weeks to officially trigger the topping formation and expose deeper setbacks to retest key support at 845–865, which also loosely coincides with the 50% fib retracement off of the major 2008–2009 low-highs. From here, look for the market to enter a period of choppy consolidation in the 800–900’s before potentially considering a resumption of the longer-term bull trend.
There's been a lot of discussion about the role the Fed is playing with money creation and the impact it will have on inflation. DailyFX discussed this as well:
The amount of money actually created by the liquidity injection engineered by Ben Bernanke and company is a function of the money multiplier, a ratio that measures what an initial deposit can expand into as it works through the system of fractional reserve banking through constant lending and borrowing. A crude estimate of what the multiplier ought to be, given the Fed’s reserve requirements of about 5.7% at present, yields a value of 1.75, suggesting that every dollar that the Fed injects into the banking system should produce $1.75 in actual money circulating in the economy. However, data compiled by the Federal Reserve Bank of St. Louis reveals that the current money multiplier is actually much lower than that. Indeed, it stands at the lowest level in over 25 years.
DailyFX then goes on to explain that the current environment is different because personal savings outstrips borrowing by the widest margin in 5 decades. My question is, where are those savings going? The stock market? Gold? Plain vanilla savings accounts?
You can read the full DailyFX Gold Forecast here:
http://www.dailyfx.com/files/DailyFX...t_for_Gold.pdf
