Gold continues to be somewhat noisy, as we are looking at this through the prism of what is going on with interest rates. Traders still get paid to hold bonds above inflation, and this has been a bit of an anchor for gold.
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The gold market has gone back and forth during the course of the trading session on Tuesday as the $4,000 level looms large above. That's an area that I think continues to see a lot of questions asked about it. It was the bottom of a consolidation area that goes back to this summer.
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Ultimately, this is a market that I think short-term rallies will probably be sold into
Ultimately, this is a market that I think short-term rallies will probably be sold into, showing signs of exhaustion. If we break down below the lows of Monday and Friday, then I believe gold goes much lower.
Keep in mind that real rates in the United States continue to pay, as the yields coming out of bonds continue to pay more than inflation takes away. In other words, you can actually make a return holding paper, and that is horrible for gold. It is not the only thing that drives gold, but it certainly is a major factor.
We did get some news during the day that the Iranians supposedly were willing to talk with the Americans. Supposedly, there was also a little bit of movement made on concessions with the nuclear program in Iran and the freezing of Iranian funds. That being said, I haven't seen anything since then that verifies that.
We have the jobs number coming up on Friday. That, of course, will be a major factor as well in the United States. Really, it's not until we get a daily close above maybe $4,100 that I take any rally seriously.
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