Yellen More Important Than War for Gold

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Gold ( GLD , quote ) has broken the 200mda average this morning despite some conditions that are supposed to be ideal for gold: WAR.

Image courtesy Bullion Vault: http://www.flickr.com/photos/bullionvault/ Russia ( RSX , quote ) continues to stealthily build troops at the border of Ukraine. Tensions are escalating, and this could be a major challenge to the geo-political landscape.

Meanwhile, Japanese ( EWJ , quote ) buying of gold bars is at record levels ahead of the consumption tax hike in Japan.

Also note that the Chinese ( FXI , quote )  central bank buying of gold continues in abandon.

Gold can't rally. And gold won't rally as the Fed continues and possibly steps up a process of normalizing interest rates.  Yelllen's comments on Fed Funds rates has served to push gold lower and was the catalyst to breaking what I have described as just another viscous bear market rally for gold.

Our target on gold remains $1,100 which is the level we feel balances out real fundamental demand from central banks and traditional industrial use, against where the yellow metal has seen a Fed inspired bid that began truly distorting prices in late 2008 and peaked into September 2011.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , International , Stocks

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