After topping $110 earlier in the week,  GLD receded quickly and ended the week around $108 in cautious trading.  An recent acceleration in Chinese inflation sparked worries that the country may tighten monetary policy to curb the trend.   US Retail Sales also came in stronger than expected which put gold under pressure.

Regarding Gold In supply news, South Africa’s statistics service said the country’s gold output fell a full 18.2 percent year-on-year in January. The republic was the world’s second largest gold miner last year behind China, according to the World Gold Council. The chief executive of the world’s number three gold miner, Anglogold Ashanti said on Monday the company viewed price dips below $1,100 an ounce as an opportunity to accelerate buybacks of its outstanding hedged positions which bolsters their overall strategy that predicts long term gold prices above $1000 per ounce. Anglogold Ashanti is not the only large miner to start removing hedges,  a full 70% of large miners are looking at significantly reducing gold hedges. Richard O’Brien, CEO of No. 2 Newmont Mining Corp (NEM.N), said he expects inflation will wreak havoc as central banks around the world continue to use stimulus programs to spur economic recovery. In a recent summit he stated the following:

“My view is that each country in the world, to some extent, has fueled the reigniting of its economy through issuance of additional currencies, The long-term impact of all the stimulus programs that we have seen in the U.S. and in European countries is going to come home to roost.”

If we look at a short term chart of gold we see that gold is near a critical support area. If it breaks current levels the next support point is $106.88 and then the 200 day MA just above $102.  If it holds at current levels,  it could rise toward $111.70 which represents the upper Bollinger Band

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