Fundamentals have been thrown out the window and technical analysis over the past few months have been at best a frustrating black art. With the dollar being hammered left, right and centre gold has raced past the $1,000 mark and is now steaming ahead with very little resistance.

The gold play seems to be re-enforcing the systematic devaluation of the dollar and as the dollar drops equity risk taking rises. This seems to be the stable and reliable trade till the year end. With inflationary pressures under way and China urging the US to increase rates the FED are in a tough spot. Jobless figures have eased but not to the extend that an improvement can be measured or to the extent that job creation is on the cards.

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At present I’m re-evaluating my trading position. We have had heavy selling and I think a bounce is imminent. This does not in any way change my long term bearish view and I expect new lows but not yet.

I’m now looking to buy FTSE 100 on a short term at the November lows. I think this will provide good support. This will be quick in and out. On gold I’m thinking of going short at $1030 should we reach that. I think the recent jump in gold is valid but once equities get a shot in the arm gold will lose its lustre.

Entry: 3600 – 3800 FTSE (June Contracts)
Exit: 4000
Stop (Mental): 3500
Point Size: 10 Euro ( 2.5 x 4)
Estimated Return: 2000