Dear CIGAs,

It is amazing what one little ol’ analyst can create with a “buy” recommendation on Goldman Sachs. That is exactly what happened this morning to lift the US equity markets higher after they were down sharply overnight in the futures markets on the news concerning CITI. That was all promptly forgotten after the analyst comments hit the wire as equity perma bulls went absolutely giddy with delight.

That then caused a rush back into “risk” and down went the Dollar after it had been moving higher, up went crude oil as it was being knocked $1.60 lower and of course, up went gold.

I am not really sure what to make of all this except for the fact that the “green shoots” were revived once again and all the hedgie algorithms went beserk on the buy side. Heaven help us for what these fund idiots have done to our markets. I am glad to see that more and more writers are echoing my sentiments in regards to these damnable funds and the destructive effects of their algorithms on the price discovery mechanism.

What is noteworthy, at least in my view, is that the long bond barely moved lower even as the S&P futures shot sharply higher. Someone appears to not believe the hoopla and the day’s euphoria. Wait until tomorrow – the stock market will probably sell off and the Dollar will shoot higher and take the Yen with it after the Yen was once again ignominiously dumped with the rush back into risk.

Crude oil and the Dollar are the two markets that gold is keying off of right now so its fortunes are linked directly to both. Crude oil moving higher causes the hedge fund algorithms to shoot buy orders to the gold pit as the inflation play then comes back into existence with commodities across the board generally moving higher.

Strangely enough, the mining shares were not particularly impressive even though they moved up but they did seem to be reluctant to follow gold higher for a while this morning. Again, I am not sure what to make of this one day price action because it is just more of the same choppiness and inability to sustain any trends in one direction or the other.

Technically, the move above $920 in gold is friendly as it serves to reinforce the support level that has been emerging just above the $900 level. Gold will still need to clear $950 to generate any real upside excitement. Before it can do that it will first need a close above $940. Downside support remains intact near today’s low followed by strong support near the $880 level.

The major moving averages in gold are all above today’s session high so gold has some definite work to do before one can get all that excited about today’s gains however the RSI’s sideways trend is still intact meaning that the consolidation pattern continues with its slight upward bias.

I have not been sending a daily chart recently because there really is not that much to look at on the charts other than what I am describing. If something changes I will make a point to get that illustrated. Open interest is basically going nowhere in gold as players exit out of boredom.

For now, more of the same sideways action, back and forth, up and down, etc, etc, etc….