FEAR OF YEAREND JAPANESE YEN SELLING BOOSTS DOLLAR AND CAUSES SELLING OF GOLD

FEAR OF JAPANESE SELLING ... The Japanese yen is falling today. Rumors that the Japanese central bank may use the thinly-traded week to do some yearend intervening has caused nervous selling by currency traders. The yen has fallen to the lowest level in a year against the Euro. Chart 1 shows it falling against the dollar. Weakness in the yen boosts the dollar, which may account for today's drop in gold. Chart 2 shows the Gold ETF (GLD) falling the equivalent of nearly $5.00 in the price of bullion. As a result, the GLD is threatening its 50-day moving average. Gold stocks are coming under some pressure as well. Chart 3 shows the Gold/Silver Index (XAU) trading down today and still lodged between its 50- and 200-day moving average. Its falling relative strength ratio shows that gold stocks have been underperformers over the last month. Chart 4 shows Newmont Mining testing its lower Bollinger Band. Its short-term indicators are still negative. NEM needs to close over its (dashed) 20-day average to turn its short-term trend back up again. The recent setback in gold and gold shares doesn't, in my opinion, change their long-term uptrends. But the short-term trend is clearly under some pressure.

Chart 1

Chart 2

Chart 3

Chart 4