Aug. 22 (MF Global) -- Price Outlook

We have a somewhat mixed opinion of the gold market going into this week and think that an A-shaped pattern could be made. Strength early in the week could come from further weakness in global equity markets and a re-pricing of recession odds following Thursday’s disastrous Philadelphia Fed Index and existing home sales results. The lead-up to Fed Chairman Bernanke’s speech in Jackson Hole could also raise anticipation of new methods of stimulus such as extending balance sheet maturities. Key resistance in gold will be found at $1,946, however, and the market may need an extraordinary event to take it above that level. We wonder then about how much safe-haven will be needed from lower stocks when their continued decline may come into question given attractive valuations, falling interest rates, aggressive buybacks and political stagnation. We would look for upside follow-through in gold early this week to potentially be followed by weakness in the second half.