A discussion of the technicals and fundamentals behind gold's powerful month-long rally to a new record high ($1,225) reached last week, and the subsequent $100 pullback in price to the 50-day moving average. The seven percent pullback is in the range of a technically healthy and therefore welcome market correction rather than indicative of a market reversal. The lower price point has in fact been met with robust buying interest.

Fundamentally, the prolonged low interest rate environment does not bode well for the U.S. dollar, and the currency's chronic weakness should remain supportive of gold. Additionally, rising federal budget woes shall require Congress to act to raise the current $12.1 trillion debt ceiling that is soon to be breached -- a politically sensitive yet inevitable public admission of fiscal failure which is also supportive of gold as an alternative to endless streams of government bonds. Not surprising in this context is the rising interest among hedge funds for investment positions in physical metal. Featuring Pete Grant, Jonathan Kosares and George Cooper.

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