At least for the time being. The past week or so has left gold in a funnny place between 875-900, a break of that level would most likely lead to another break of about $20 in either direction. Our stimulus packages seem to slowly be working, as banks are borrowing near 0% and lending out around 4.5%, they are definitely making money once again. Once the banks deem that they are out of high water, they will slowly begin to trickle down the funds to consumer by untightening their loan requirements. This untightening will lead to a greater supply of money to be spent my consumers, and thus get the economy rolling in the right direction again. It seems as though the housing market is finding a bottom, as multiple offers on foreclosed and distressed properties is a positive sign that buyers are re-enetering the markets.
The flight to quality in bonds and gold seem to be diminishing, and more likely than not we should see the lower $800 level in gold within the next few weeks. A technical reversal seems to be in place, and any rally should be sold. The gold boom seems to be too commercialiized for my taste, with all these infomercials to send in your gold and receive top dollar. Who in the right mind would actually mail their gold away?
Until we get better reports on how well our stimulus packages have affected our economy, we shouldn't expect any surprises to the upside. It would take some distinct fundamental news to send the market roaring up again. With stocks turning up, we have to assume that people are switching their sentiment from gold, back to stocks.
