UK breaks some records | Has gold turned down again?

UK unemployment figures were seriously good yesterday, driving the Pound to a level where it is on the cusp of breaking out to the upside. While the rate against the US dollar is now very close to where the Bank of England announced it would consider raising interest rates, it is very clear that they are still reluctant to do so. There is even a suggestion that they will revise forward guidance as an alternative to raising rates. This would have the effect of lowering the pound because a rate rise is now, at least to some extent, priced in.

Records were broken across the board yesterday. The decline in the number of people out of work was the second largest since records began. The number of people in work grew at the strongest pace since 1971, when records started to be kept. The claimant count fell to the lowest it has been in five years. Even government revenue, comprised of tax receipts, VAT and stamp duty, rose at the highest level in December since records for this measure began in 1998.

Has gold turned down again?

Regular readers will know that we hold the view that gold is in a cyclical downtrend, which will continue as long as Quantitative Easing in the US is being dismantled. Like all prices and rates, however, a trend never goes in a straight line. Gold is no exception and has been in a counter trend since last December, which has seen it rise to the level of 1282 US dollars per Oz.

Gold has now turned, once more, and seems to have formed what might transpire to be a double top. There is a support level at 1234, an easy number to remember and if it breaks that the price can be expected to head south, once again.