Monday October 21, 2013 08:32
Metals continue to consolidate as gold is finding support at $1,312, and continues to falter at the $1,325 resistance level. As a trader if your premise is constructive, until rates (first through tapering), and then by increasing, it then appears the green light is in place. The likelihood of a Fed taper in October is virtually zero and the probability is in the 10% range for the December meeting. Signs that the EU recovery is showing cracks suggests that monetary policy across the pond will also continue to be accommodative. The negative case is premised on comparative returns. If the US equity market continues to enjoy upward momentum, it will attract flows into the US dollar, which will strengthen the currency and pull cash allocations from the commodities. This scenario is in play, but with weak fundamentals. Weak consumer sentiment and the continued cloud overhanging fiscal policy suggests that the equity markets are looking frothy.