Gold Futures Eyeing $700!
Fears of higher inflation down the road have helped boost Gold futures this afternoon, as traders look for the Federal Reserve to focus less on fighting inflation and more on keeping the U.S. economy out of recession. In addition, a stronger U.S. stock market is also supporting Gold prices. Technical traders noted December Gold rose above the key 100-day moving average, which many traders use to determine if a market is bullish or bearish as a trigger for fresh buying by momentum traders. Buy stops were triggered above the recent highs of $688.10 and psychological resistance of $690.00. This morning's release of the ISM manufacturing index for July came in at 52.9, down from 53.8 in June but still above a reading of 50, which signals expansion. This was also deemed supportive to Gold futures, especially in light of the anticipated rate cuts by the Fed. The next resistance point for December Gold is seen at the July 26th highs of $695.50, with support found at $679.00. December Gold closed at $691.50, up $9.60.
Surging Wheat futures helped buoy the entire grain complex, with Soybean and Corn futures posting sharp gains to start the week. November Soybeans reached highs not seen since July 16th, closing above the $9.00 level for the first time in seven weeks. Coupled with the potential for declining U.S. Soybean crop estimates due to hot, dry weather in the southern Soybean growing regions in August, the limit-up move in Wheat futures is seen as a major factor in today's sector-wide price rise. December Corn rose to 1-week highs, moving above both the 20- and 50-day moving averages and sparking fresh commodity fund buying. However, prices closed well off the day's highs as this morning’s report on U.S. Corn export inspections for last week were below the previous week's totals. Corn export inspections totaled 35.634 million bushels for the week ending August 30th versus 36.514 million bushels the previous week. November Soybeans closed at $9.07 1/2, up 25 cents, and December Corn closed at $3.53 1/4, up 13 1/4 cents.
Mike Zarembski, Senior Futures Analyst
