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: (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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