Hourly Action In Gold From Trader Dan

Posted: Feb 17 2009 By: Dan Norcini Post Edited: February 17, 2009 at 3:47 pm

Filed under: Trader Dan Norcini

Dear CIGAs,

New all-time record highs were once again set in gold priced in both British Pound and in Euro terms at today’s London PM Fix. Gold priced in sterling terms came in 678.584 while euro priced gold was set at €766.976. It would appear that the former is making a run at 700 while the latter looks to be targeting €800. I have not yet had a chance to calculate the Canadian Dollar or Australian Dollar priced gold but it looks pretty certain that both of those have also set brand new all-time record highs as well. Meanwhile US Dollar priced gold hit a seven month high!

There was also further word out of Russia’s Central Bank that they intend to continue buying gold as part of their reserves in 2009. While the news was not particularly surprising, it did reinforce the notion that Central Banks are increasingly seen selling less and less gold moving forward. The market liked the news.

Gold equities, aka, the mining shares, completely separated themselves from the stock selling orgy and shot strongly higher with both the HUI and the XAU pushing through last week’s highs. Technically many issues within this sector now have broken out on their weekly charts bettering the swing highs made late last year and look to be setting up strong trending moves. It is becoming obvious that gold is increasingly being viewed as one of the only true safe havens out there and many are looking seriously at the mining sector as a viable avenue of refuge from the economic storm. That is proving to make life quite difficult for the perma shorts in the mining sector. The XAU is trading right in the proximity of the 50% retracement level from the March 2008 peak and the October 2008 low. Technically, this is a significant resistance barrier so if the index can push through this level and hold those gains for the rest of the month, it will qualify as solid technical breakout on the long term monthly chart especially since that level near 137 is also quite close to the 50 month moving average. Stay tuned.

Incidentally, the silver chart looks very, very impressive. The weekly continuous charts show it having run to the confluence of the 50 week and the 100 week moving average. Should it be able to close above those levels on Friday of this week, silver could ignite quite easily. I should also mention that oddly enough, both platinum and palladium were higher today with platinum especially strong. It just missed $1100. I find this noteworthy because heretofore both of these metals have been trading as industrial metals are have seen their price battered especially given the woes in the auto industry globally. To see them running higher today tells me that they have become recipients of safe haven flows and are also trading as precious metals. If silver, platinum and palladium are all rising together with such crappy economic news, investment demand is driving them higher and is more than sufficient to make up for any drop off in industrial demand.