Dollar has been suppressed by the Federal Reserve money printing and high U.S. budget deficit and ultralow interest rates, yet Europe is in a worse shape making our green back look attractive. Although Italy’s trouble is bullish for gold, rise of dollar is bearish for the dollar denominated metal.

S&P cuts Italy's credit rating from A+ to A with outlook negative, citing the current political situation is limiting the nation's ability to respond effectively to its debt crisis. Gold rose in response to the news but is held back by the strong dollar. "The negative outlook reflects our view of additional downside risks to public finances related to the trajectory of Italy's real and nominal GDP growth."

Have you ever experienced a “Deja Vu” feeling? Well, if you have never experienced one, maybe after reading this post you will.

Let’s start with a technical chart of Gold. These days, gold is holding up strongly, and is only $80 below its all-time high.
If this continues, we might consolidate for a couple of weeks, to work off the overbought condition of the MACD indicator.

Gold prices finished August trading above $1,800 an ounce, a magnificent 12.3% for the month, recording its best one-month performance since 2009.  There are a few fundamental reasons for the gold prices to keep up the uptrend. The most important one is QE3 or another round of asset purchase program by Fed or simply said, printing money out of thin air.

The possibilities of a QE3 are high considering it was discussed in the FOMC's August 9 meeting where some policy makers were in favor of spurring the economy while some were worried about the risk of inflation for such a lose monetary policy.

On Tuesday, Chicago Fed chief Charles Evans called for the stimulus program until unemployment falls below 7% or inflation rises above 3%.

Where do you expect gold prices are heading now that even Swiss gets to the business of devaluing its currency? $1,800 an ounce?

One major supporter of gold prices is governments around the world getting into a currency war, preventing the appreciation of their currencies so their economies can grow faster. The losers are the people holding these currencies and the winners are investors exchanging the paper money for gold.

The Swiss National Bank press release is available for download below.

If you could please answer one simple question and then we can move on: How are you going to pay up your debt?

In the past two weeks fear spread across global markets and sent volatility to the roof, as investors became more nervous about how governments were going to deal with the debt issue. S&P downgraded U.S. debt in response to the politicians playing last minute game, coming up with no clear plan and the likelihood of returning into recessions.

The situation was more dramatic in Europe. Twenty-one months ago Greece admitted it was broke and yet, there is still no fix to the issue as there is no consensus on who will ultimately pay for it. By joining Euro, Greece suddenly accessed cheap credit and misused it by creating a lot of jobs in a bigger government. They thought their gold membership meant nothing could go wrong.

We reached the $1,600/oz price forecast target as the EU debt crisis sees no end in sight and the debt ceiling talk is not making that much progress. This is the 10th-straight gain for the yellow metal. How high can the prices move up in the Uncharted territory before hitting resistance? The answer comes from technical analysis, the Fibonacci retracement, if nothing in fundamental nature changes in the mean time.

The Fibonacci analysis shows gold prices can hit resistance at $1,625 an ounce in a weekly chart. If prices manage to get to those levels in absent of any progress in euro-zone and U.S. debt ceiling talk, we can see the first notable resistance and selling pressure.