Gold Climbs a Bit on IMF Support in Europe and Good News from the U.S.

This week we had a standoff between positive news from two countries whose currencies usually move strongly in opposition to each other, while gold got some spoils of war regardless.

This week's been an interesting one so far. We had a head-to-head locking of horns between news from Europe and the U.S. and when the dust settled, euro and gold won.

The euro climbed for the 2nd day (up 1% at 5pm NY time) against both the dollar and the yen after the IMF (International Monetary Fund) offered to raise its lending capacity by up to $500 billion in order to protect the global economy from Europe's debt crisis.

Meanwhile, an important statistic for the U.S., "Output at U.S. factories, mines and utilities," rose 0.4 percent last month after a revised 0.3 percent decline in November per Federal Reserve data. On top of that, another report that came out today showed that confidence among U.S. homebuilders rose this month to the highest level since June of 2007. In response to all this warm and fuzzy, the Dollar Index still stepped down 0.8% to 80.518 - a new low since January 5th.

Given the recent past observation that good news from Europe pulled up gold and good news from the U.S. usually brought it down, my nerves are kinda relieved that gold still managed to inch up a few dollars an ounce to $1,666 (a 0.34% increase).

These recent events may seem insignificant but a lot of fundamental news analysts like to see how much an instrument's price moves in reaction to news from correlated countries. Now I ain't sayin' that this week dropped a new crystal ball on my lap but take a look at this:

If the euro and the dollar both got equally good news and that had lowered value in the yellow metal severely, this would have told me that things looked pretty bleak for gold. If ONLY the euro had good news and the US of A had nothin' to answer with, while gold STILL dropped, then I would have been sweatin' bullets. Instead, the way I interpret what happened, is that gold is still hangin' in there grabbing the bull by its horns.

I know it ain't a lot to hold onto, but before we listen to any naysayers on the 2012 outlook for gold, I still believe the yellow metal champ is holdin' his own for the time being...

Keep up the good fight,

- Patton

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