GOLD

Gold has not been influenced by all time high, energy prices.

Rather, Gold is being influenced by what appears to be a bottom in the US Dollar. Until and unless 71.05 is taken out in the June Dollar Index, I think it fair to say that a short-term, if not a much more important longer-term low is in place for the Dollar Index.

Now and again there are signs that gold has disconnected from the oil price movement, an association I do not think is backed by sufficient logic, and in view of this latest price action one reluctantly comes to the conclusion that it is looking a possibility that the propagandists and technicians will have their way, even if oil goes to $150 a barrel in the next few weeks.

June gold closed higher on Friday as it extends this week's rally above the 10-day moving average crossing at 873.80. The high- range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are bullish signaling that sideways to higher prices are possible near-term. Closes above the 20-day moving average crossing at 896.80 are needed to confirm that a short-term low has been posted. If June renews last month's decline, the 62% retracement level of the 2007-2008-rally crossing at 810.60 is the next downside target. First resistance is today's high crossing at 890.80. Second resistance is the 20-day moving average crossing at 896.80. First support is the 10-day moving average crossing at 873.80. Second support is last Thursday's low crossing at 846.40.

Although commodities are becoming more widely accepted, the sector is still less popular than some other investment vehicles. To put this into perspective, consider that commodity funds still make up less than 1% of the available funds today. The lack of consideration of the economic environment we are in is one key mistake that is made by the majority of financial planners and investors. Investors should pay attention to the trends taking place, particularly inflation.

The bull market in gold is not over. There is simply too much pressure for higher inflation and a weaker dollar for gold not to rise. A dreadful day (or week or month, or even a season) for gold doesn't drain out the bad stuff that's been simmering in the economic cauldron. The Federal Reserve hasn't stopped printing money (in fact, it's picked up the pace); the U.S. government hasn't balanced its budget (in fact, the 'stimulus package' is making the deficit worse); and the dollar's foreign exchange value hasn't fallen nearly enough to cure the U.S. economy's enormous trade deficit. In short, don't believe the sentiment that all is better in the U.S. economic and financial systems.

Read: When bad news is good news for gold