CNBC On Gold

What kind of FOMC week would it be without some gold obsession in the headlines of the mainstream media?

Gold may drop to $1,200 an ounce, possibly breaching the key support level, thanks to a resurgent U.S. dollar and higher Treasury yields on expectations that the U.S. Federal Reserve could signal tighter policy this week, CNBC’s latest survey of strategists, analysts and traders shows.

Says who?

“In the shorter term I believe gold tests $1,200, trades as low as $1,190 or so, after which the bargain-hunters will come in and move the price back to the $1,240 to $1,250 level,” said Anthony Grisanti, President of GRZ Energy in a September 15 commentary. “Geopolitical has been quiet and all major economies are easing one way or another. And that makes the Greenback the strongest buck on the block. My bias for gold is lower.”

Oh, says Anthony Grisanti.  Okay.  Well even just mentioning “geopolitical” disqualifies Mr. Grisanti because it has nothing to do with gold.  But for the sake of argument, gold has already lost support per this alternate chart I am using due to stockcharts.com being on the fritz this morning.

See that low at a nice, crisp 1240?  That was a loss of support.  Before that gold dumped out of a Symmetrical Triangle, targeting below 1200.  I am flying naked here without stockcharts.com, but I don’t recall any notable support at 1200.  The strategist wouldn’t be talking about ’round number’ support just to fill some headlines on FOMC week, would he?

Well sure he would.  These are the financial markets and this is the financial media, constantly churning the pap to feed and bamboozle the masses.  Gold lost support already, end of story.  And furthermore, TA is used too often in the media to scare or titillate people.  It’s just a measurement and probabilities tool.  Anybody who can access stockcharts.com for free can put out chart based views and make them mean something.

The article goes on and has a video (which I am not bothering to watch) entitled “This could be a brutal week for gold.”  Ooooohhhh, not just bad, but brutal?  Shit, thank you MSM, I almost got caught leaning the wrong way!

A stronger U.S. currency makes dollar-denominated assets like gold more expensive for buyers paying in currencies like the euro or the Japanese yen. The dollar is hovering near a 14-month high against a basket of currencies after posting its ninth straight weekly gain on Friday.

La la LA LA LA!!!…. timely advice… only a few months tardy.

“Any indication of the Fed normalizing its monetary policy faster would spur more broad-based USD (U.S. dollar) strength and provide room for gold prices to drop toward our 12-month forecast of $1,050,” UBS strategists Giovanni Staunovo and Dominic Schnider, said in emailed comments to CNBC.

The potential is to below $1000.

The article then trots out some gold bulls and more geopolitical filler.  There is also talk about rising interest rates but the thing that people interested in gold should be watching is yield relationships, strong dollar or not.  I don’t post that yield curve stuff for the fun of it.  It has been in a downtrend for years now and that is and has been gold-negative.

If yields rise but long-term yields rise faster, tune out the strong dollar, gold bear crowd.  If the Fed makes good and really does decide to clean up Dodge, be careful about gold because they will be doing the right thing.  Gold is for when they a) do the wrong thing and then b) get caught in the act.  In my opinion ‘a’ is in the books and ‘b’ is yet to be determined.