Both gold and oil are moving into strong seasonal pricing
periods that run from July into October. Commercial demand
for both strengthens into the autumn.
My gold macro indicator, which jumped higher last autumn,
has progressed slowly in 2006 and has been flat since the
mid-May blowoff top for gold. Since an economic slowdown
is developing and since the Fed has moved liquidity up
only modestly this year, the best bet for gold would be
a strong showing from oil and natural gas prices as we
progress into Fall.
I noticed in browsing various sites that bullish sentiment
for gold has jumped at an astronomic pace since the recent
quick bottom and upturn in price. The gold gurus have been
piling on to the bandwagon.
My micro economic work on the gold market puts fair value
at $450-460 an oz. The macro work puts fair value at $500 -
525oz. On a short term technical basis I have gold as strongly
overbought at $665-670oz.
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