What does gold's failure to breach $1800/oz mean?

Gary Wagner & Robert DiLallo
thegoldforecast.com

The precious markets seem to still be operating in reaction to gold's failure to breach USD 1800 and any excuse seems like the right excuse to sell, or at least stand pat.
 
For instance, in the quarter ending in June, China's economic growth fell to a three-year low of 7.6 percent. Forecasters have been expecting growth to slow even more in the most recent quarter. (Updated figures should be released later this week.) Traders have been expecting, therefore, that China would add stimulus to their economy.
 
Now the fear is that China will find the level of growth they are experiencing to be adequate for their mysterious needs and will not inject financial stimulus. Maybe yes, maybe no. "The bottom line is China's in this kind of gray area where things aren't as good as people want them to be but they're not bad enough to continue to just throw money at the market," Kingsview Financial analyst Matt Zeman said.
 
That's about right. Meanwhile, precious metals traders threw up their hands and went howling into a sell-off based on this, and on the problems of our old friend, Spain. Clarity on the Spanish issue certainly would be most helpful.
 
As these two areas of intense interest fail to resolve themselves, traders seem to be retrenching, taking profits, grabbing a cold one and easing back in their recliners.
 
Couple those questions with continuing upbeat news from the US economy - consumer confidence on Friday was up significantly and today, higher-than-expected retail sales growth was reported - higher, in fact by 3/10ths of 1%, for a total increase of 1.1%. This has caused some analysts to say that overall economic growth in the United States will approach 2.5% soon.
 
However, in the world's largest economy, the major factor right now is the uncertainty with which traders are viewing the Romney surge. Regardless of where you stand on the political spectrum, it has to be clear that in the short term Republicans are: anti-inflation (they represent the debt-holding class); will cut budgets (which will cause further employment difficulties); and they will cut taxes in the hope that more money will wend its way into the consumer sector.
 
Not to open a can of worms, but it seems that the tax cuts are geared to the wealthier 10% of the economy. This may prove incorrect. The wealthy, however, don't need a tax cut to consume goods. And, if the Bush years are a guidepost, the last tax cut money back then did not create very many jobs even before the Great Recession.
 
The point is that there is a correlation between Romney's rise in polls recently and the fall of the price of gold. Whether there is a good basis for causation is an argument for the ages.

thegoldforecast.com