It's Not Lie

Gold prices lost some steam Friday as the U.S's weak inflation reading tempered inflation fears that have been bubbling up around the globe. The U.S. consumer price index for August was unchanged from July but this was in opposition to a higher-than-expected producer price index reading on Thursday. The U.K. reported a higher inflation reading this week and India's central bank is taking steps to take money out of circulation to fight inflation.

Friday is also quadruple witching in which options on stock index futures, stock options, stock index options and stock futures all expire, leaving traders having to rebalance their portfolios. This leads to more volatility especially in the gold market.

But the real reasons gold is breaking to new highs right now are hedge funds and the Federal Reserve. The Fed will meet Tuesday to discuss interest rates, and although no changes are expected, the rumor is that the Fed will run its printing presses and issue another round of monetary easing. A low inflation reading in the U.S. might also give the Fed a green light to pump more money into the system.

Gold is watching all of this from its quiet safety haven in its own corner. And as it quietly watches this process, it is also quietly making new all-time highs. Gold is trading at $1,279.00 an ounce, at the time of writing, after U.S. gold futures for December delivery rose 0.6% to $1,280.90, in the pre-market. In an era where all currencies around the world continue to get cheaper and continue to lose buying power, the one constant bedrock is gold. It will continue to call them out in its own quiet way, making new highs, as more and more currency is created. Gold knows what is going on and its not susceptible to a PR campaign.

Although there have been reports that the Fed will do no such thing because the governors can't come to a consensus, the conviction and gold's monster rally tell a different story.

The other factor moving gold prices is hedge fund buying. Strong double-digit gains like the market saw on Tuesday always point to big purchases. Many experts say that gold will inevitably hit $1,300 as "it seems very likely that the funds have decided that this is the next target,"

Of course, fund buying leaves the room for fund selling. If funds are buying gold as protection against more quantitative easing then what happens if the printing presses never run and the crisis premium comes out of the market? A $30 move up could result in a $30 selling frenzy.

I am always reminded you to Care Fully in SELL Position.

Many traders are looking at any price dips as an opportunity to buy gold.
The prices are expected to scale up further till December considering uncertainty in US economy and weak equity markets globally. *NOTE*

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