Morning Futures Roundup

---

Gold Stabilizing?

   Fundamentals
Gold futures have rebounded from recent lows on value buying and short-covering, but is the metal set to rebound or is this simply an upward correction? Gold has found some strength in improved investor confidence in the Eurozone, as well as stronger US equity prices. What has stopped some metal bulls from entering the market is that prices are dependent on these outside markets, meaning that a pullback in equities could drag precious metals along with it in the near-term. However, as a means of preserving wealth during times of uncertainty, few investment options are as attractive as Gold. Prices between 1500 and 1600 are extremely attractive for the long-term buyer, which should keep the physical market relatively tight and may limit the downside for the metal. The spark that precious metals need has to come from the speculator. Many speculators appear to have focused on other products like Crude Oil and treasuries during the past several months, so declines in those markets could bring life back into the Gold market.

   Technical Notes
Turning to the Feb Gold chart, we see prices making a sharp reversal after testing the mid-1500's. The sharp sell-off came on the heels of a downward breakout from a wedge formation on the daily chart. The point at which Gold reversed was near the measure of the expected move, which suggests that both short-covering and fresh longs contributed to the sharp bounce in prices. Since crossing through 1600, prices have begun to move sluggishly, consolidating in a sideways pattern. Bulls would like to see prices cross through the 1700 level, which contains the October relative highs and November relative lows, in order for the market to gain further traction. It is interesting to note that although prices and the RSI indicator have moved sharply higher, the momentum indicator has only slightly tilted to the upside. This suggests that the market may see weakness or choppy trading in the near-term.
   
   
    CLICK HERE FOR THE FULL-SIZED CHART



-------------------------------------------------------------------------------------------

Disclaimers
This article is provided for informational purposes only. No statementin this article should be construed as a recommendation to buy or sell asecurity or to provide investment advice. The content provided has beenobtained from sources deemed reliable but is not guaranteed as toaccuracy and completeness. optionsXpress makes every effort to providetimely information to its recipients but cannot guarantee specificdelivery times due to factors beyond our control.

Derivatives involve substantial risk and are not appropriate for all investors. Please read the "Disclosure Statement for Futures and Options" prior to investing in futures or options.

For investments using a straddle or strangle options strategy thepotential loss is unlimited. Multi-leg option strategies are subject tomultiple commissions. Profits may be eroded by the commission expendedto open and close the positions and other risks apply.

"

---

View Mike Zarembski's post archive >