Gold withstood 650 support. XAU Gold & Silver Index ready to breakout 150 resistance amid summer doldrums

by John Lee

07/18/2007

XAU is just 2% from breaking out of 150, which is a resistance that’s been tried for over 8 times in the last 12 months. I expect fireworks to start once 150 is overcome. (http://stockcharts.com/h-sc/ui?s=%24XAU)

The main reason I am bullish on gold over perhaps some other analysts is the appreciation of Asian currencies. India and China are 2 major gold importers and their currencies have been strengthening over the dollar non-stop for the last 12 months. With Indian Rupee gained nearly 20% over the dollar in the last 12 months.
http://quotes.ino.com/chart/?s=FOREX_USDINR&v=d12

Measuring gold against just the dollar is deceiving, as gold at $650/oz now is no different from $500/oz in 2006 dollars terms for the Asians. In terms of risk and reward, I think gold stocks offer better value than say Moly or some high flying Uranium issues.