Zoom-zoom! Check out this chart of gold … 
As you can see, gold is pushing above overhead resistance from December 18th. Meanwhile, momentum (at the bottom of the chart) is improving. If I were a betting man, I’d say gold is probably going back to test overhead resistance from last month. We have to wait and see how things close at the end of the day, but it appears that the correction in gold may be over.
Why is this happening? Well, the U.S. reported disappointing jobless numbers on Friday — the economy lost 85,000 jobs in December and the unemployment rate was steady at 10 percent.
Meanwhile, Bloomberg tells us that “China, the engine of recovery from the world’s worst recession since World War II, reported a 55.9 percent increase in December imports and supplanted the U.S. as the world’s biggest auto market.”
More good news from China: That country’s exports surged 17.7% in December from a year ago, ending 13 months of declines.
Finally, China said Sunday that oil imports rose 14% last year to a record high in December, part of a 56 percent surge in overall imports last month.
In other words, as I’ve been saying, the global economy continues apace, while the U.S. recovery lags (for now). This lowers the demand for U.S. dollars. And that, in turn, drives prices of all sorts of commodities higher.
China may be sitting pretty now, but just wait until the currency wars start. The Chinese have fired the first shot, with its egregious peg of the yuan/renminbi to the dollar, but unless our government is totally corrupt, the U.S. will fight back.
Wait … totally corrupt? Okay, we’ll put the chance of a currency war at 50-50.
Subscribers who don’t know what I’m talking about when I say “currency war,” don’t worry. I’ll send you my views in Red-Hot Global Small-Caps and Red-Hot Commodity ETFs later this week.
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- Gold Chart and China News (07/16/09)
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