Gold Prices
| 31 August 2011
Inflation Adjusted vs. Dow Jones
The technical configuration in Gold would favor speculative short sellers and hedge fund portfolio managers to manage variable risk and protect the downside risk after the weekly candlestick bar for the precious metal. The weekly closing which apparently formed a hanging man; where a sell-off occurred after registering a new high at USD1912.02/oz. and drove the prices lower to the USD1702.90.
The price closed for the week ending the 26th of August closed at USD1827.26, which reflected some profit-taking and protective short-coverings during that period. An increase in short sellers towards exchange traded funds (ETF) and options to cover previous long positions and hedge players to insure their profitability until the prices settles down for the time being. Some position adjustments were made that led to the quick price recovery towards the closing by some institutional players taking advantage of the wide price swing. Currently, the prices have stabilize at the USD1830.29+/- and the near term resistance is the previous high of 1912.02.
Our previous calculation for inflation adjusted gold prices compared with the Dow Jones at 10550 was at USD1550.00/oz for Gold as the prices have been re-adjusted accordingly with the Dow at the current levels are just about right. Although, prices would keep its pace with the DJIA continue to move higher after the previous drop as the same did with Gold prices. The only assurance and strategies that is being played out to day is an increase in hedging strategies utilizing the ETF for long term position buyers of Gold investments.
