The Next Test for Gold is Coming Up

This week's payrolls release will provide another (short term) test of gold's recent resilience. Usually, a little weakness is seen ahead of the report. Per experience, if the market is strong ahead of the report, it is more likely that the report will trigger a downward correction than when the market is either non-committal or weakening slightly into the release. In recent trading days, gold and gold stocks have consolidated their post FOMC gains:

 

Gold, August

Gold, August contract daily – consolidating after the quick gain following the FOMC meeting – click to enlarge.

 

Gold stocks still look good as well. Overbought conditions have been relieved a bit lately. Bulls will want to see the RSI on the daily chart stay above the 40-50 level on pullbacks. Likewise, the HUI-gold ratio needs to maintain the bulk of its recent gains:

 

HUI

HUI and HUI-gold ratio: so far, so good – click to enlarge.

 

From a technical perspective, the main bullish argument remains that support was first broken, and subsequently very quickly regained – marking the breakdown as false.  Also, the HUI-gold ratio has given a buy signal by breaking above its downtrend line.

A pullback that closes, or partially closes the recent gap on the daily chart would present no big problem, but the index needs to remain above the 50-dma (currently at approx 220) to keep the short term bullish trend intact.

 

Conclusion:

As always, it is unknowable what the payrolls report will actually look like (there is no point in engaging in guessing games on it). A report that is significantly stronger than expected will likely be a short term negative for gold, while a report in the expected range or slightly weaker is unlikely to derail the recent rally. Of course it shouldn't even matter, but with the market fixated on Fed policy and how it is influenced by employment, the report has become an important short term trigger for gold and bonds alike.

 

Charts by: BarCharts, StockCharts

 

 

 

Emigrate While You Can... Learn More

 


 

 
 

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA

   
 

One Response to “Gold So Far Still Looking Good”

  • No6:

    Last weeks post fomc buying looked suspicious to me. I suspected bullion bank buying some cheap amo in preperation for another smack down. I remain long term bullish but right now I smell a rat.

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • No results available

Support Acting Man

Austrian Theory and Investment

j9TJzzN

The Review Insider

Archive

Dog Blow

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

Mish Talk

     
    Buy Silver Now!
     
    Buy Gold Now!