Still bad news for U.S. economy

The U.S. economy suffered further bad news. First, the Commerce Department left unchanged its estimate for growth in the fourth quarter, to 0.6% only. However, analysts expected a 0.8% enhancement.

These figures are 2.2% growth over the whole year, from 2.9% in 2006, which is the lowest rate since 2002. Household consumption fell sharply in the last quarter (+1.9% instead of 2% estimated earlier, and after 2.8% in the third quarter) and investment in the stone has indeed fallen by 25, 2% (instead of -23.9%), the largest decline recorded since 1981. Business investment grew by only 6.9% (instead of 7.5%).

Inflation is well above normal

The index measuring prices related to consumption expenditures (PCE) increased 4.1% (instead of 3.9%), and the PCE core index (excluding food and energy) increased 2.7 %, as in the first estimate. Now the Fed wants to keep it normally from 1% to 2%.
Finally, the weekly claims for unemployment benefits rose 19,000 to 373,000 in the United States during the week ended Feb. 23. Analysts had forecast 350,000 jobless.

Has the Gold prices topped out?

Ever since gold made a high around 1220 USD, it is declining from that level and recently it touched a low around 1050. Is this the high for another 5 years? or will it rally again above 1220 to make a new high in coming months? This is a million dollar question right now?

Almost all the fund managers and Analyst are bullish on gold and they are advising their clients to buy gold as investments. The consumption of Gold by China has exceeded the consumption of India. And it is being stated as one reason for the rise in Gold. And also it is been said by Market pundits that many central Banks would also start buying Gold for hedging purposes.

Irrespective of this, what does Technical Analysis say about future price of Gold. Technical Analysis would really predict the future course of the Gold Market. We have seen in many Markets, the top would be formed, when everybody is bullish. So once everybody has invested in Gold, surely the prices are going to decline. No market would continue to rally or decline forever. The markets need to consolidate while rallying or declining.

As the same case, the Gold market has to top out somewhere now or then. But going by the technical analysis, it says a top is already formed. So, in the future, Gold is unlikely to move above 1220 at least for another5 years. From here, it is going to decline further towards 800 USD in coming years.

Be careful when it comes to investing in Gold.