Odd Bullishess In The Gold Ranch

Despite a home-price drop in November, as measured by the S&P/Case-Shiller Home price Index, the economic news has largely been good. Consumer confidence is up for the third straight month, and the latest results are higher than expected. The IMF has revised its 2010 global-growth estimate upwards. The stock market turned up.

Given the rationale that an economic-growth pickup is bad for gold, because it presages a Fed rate hike, the bullishness in gold is surprising. After bottoming near $1,084.50 at 9:30 AM ET, gold's marched up to about $1,100. The U.S Dollar Index hit its high of 78.632 at about this time, but its pullback did not mirror gold's rise until about 10:45 AM. According to the Kitco Gold Index, the rising dollar took a bit off the gold price. "Predominant buying" explains the rise - a real reverse from earlier this morning.

What's odd is not only the economic backdrop but also the timing. Until yesterday, it's been almost normal to expect gold to be pushed down in mid-to-late morning trading, and either recover or mark time in the afternoon. This pattern began to reverse yesterday, and nearly reached full reverse today. Had it not been for an 8-8:30 pull-down, it would be completely reversed.

Needless to say: the $1090 support level, although pierced several times these last few days, has ended up holding. $1,100, although poked at today, has not been overcome.


Update: Not as of yet. After three quick pokes at $1,100, gold has slid back a little to the $1,098 range. The U.S. Dollar Index's slide to below the 78.4 level has ended. Although it's blipped upwards from 1 to 1:30 PM, it's still established a trading range centered around the 78.4 level. As of the time of this post, spot gold's at $1,098.40.