Gold Traders Think Bernanke Could Throw Investors a Curveball (GLD) (IAU)
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Lately comments by Fed Chairman Ben Bernanke have done a good job pushing gold prices around. This year, much of the pushing has been to the downside. In some ways, this isn't an accident. The Fed's Operation Twist was a deliberate attempt by Bernanke to accomplish his goal of spurring growth, while at the same time undercutting inflation, and gold as a result. It is also worth noting that beginning last fall Operation Twist caused the S&P to rise more than 20 percent in less than six months, while gold dropped by that same percentage.
Technical analyst Abigail F. Doolittle of Peak Theories Research thinks there is a relationship between the S&P rally, gold's selloff, and Operation Twist. She also thinks that a substitute policy move could be in the works that may not involve operation twist or simple quantitative easing. What that move could be, if any, remains to be seen, but one thing is for sure: If the Fed was going to prep investors for a change of course, Jackson Hole is the perfect place to begin laying the groundwork.
In terms of trading, from a technical perspective Doolittle thinks that in the unlikely event that Bernanke fires off on QE3, gold will breach its Descending Triangle top at $1912 per ounce and take a shot at $2200 per ounce.
If Bernanke disappoints and gold's recent gap fills, Doolittle says "this year's Symmetrical Triangle confirms to the downside at $1,557 per ounce for a target of $1,395." However, first gold needs to take out July’s smaller ascending triangle. Otherwise gold could consolidate and spring higher later this year.
iShares Gold Trust (NYSE: IAU) and SPDR Gold Shares (NYSE: GLD) are trading flat on Thursday.
Technical analyst Abigail F. Doolittle of Peak Theories Research thinks there is a relationship between the S&P rally, gold's selloff, and Operation Twist. She also thinks that a substitute policy move could be in the works that may not involve operation twist or simple quantitative easing. What that move could be, if any, remains to be seen, but one thing is for sure: If the Fed was going to prep investors for a change of course, Jackson Hole is the perfect place to begin laying the groundwork.
In terms of trading, from a technical perspective Doolittle thinks that in the unlikely event that Bernanke fires off on QE3, gold will breach its Descending Triangle top at $1912 per ounce and take a shot at $2200 per ounce.
If Bernanke disappoints and gold's recent gap fills, Doolittle says "this year's Symmetrical Triangle confirms to the downside at $1,557 per ounce for a target of $1,395." However, first gold needs to take out July’s smaller ascending triangle. Otherwise gold could consolidate and spring higher later this year.
iShares Gold Trust (NYSE: IAU) and SPDR Gold Shares (NYSE: GLD) are trading flat on Thursday.
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