Gold – 1 Nov

What I wanted to see on the gold chart came to be today and it gives the traders a decent opportunity to enter long positions. We had a massive sell off as news that the world was not fixed after all and people fled as usual from anything that entailed risk. Gold was sold to raise cash, a truly sad and pathetic state of affairs. But somewhere along the way the light bulb came on and gold caught a safe haven bid as some of the cash found its way to the real hedge against government and their central banks. Price made it all the way down to the breakout level at 1680, and in doing so bounced smartly off the 18 day moving average. So support held and then repelled price higher, forming a beautiful hammer reversal candle. volume was good and I believe this is the buying signal that more than a few have been looking for.

Resistance is right where the price ended the day, at the 45 day moving average around 1721. Then we have chart resistance at 1754 to deal with. Support will be the the breakout level of 1681, which will likely be a swing low. For traders, you won’t be wrong with the bullish thesis unless this swing low is taken out. Therefore a stop could be applied just below there. Investors buy physical and chill out, Freegold is coming and you will not be concerned with measly moves measured in hundreds. Stochastic is now embedded (3 days above 80) and it indicates strengthening momentum where pullbacks should be considered buying opportunities. RSI is just above neutral and has plenty of room to run higher before any longs should be clipped. I like a move to re-test 1754 and new higher high above that level. 1775 should be formidable resistance, but the seasonal aspect of gold suggests strength between now and when the markets fold up for the holidays.

Two dynamics are playing right now in gold. There is the inflation dynamic that says the central bankers are going to print, print, print, and gold goes up! Then we have the panic into the dollar and out of risk dynamic that says I need to be in cash, and gold goes down on a stronger dollar. A third dynamic is also waiting, where the panic will be into real money like gold and away from risky paper, the dollar being public enemy number one. We saw some of that today. Do not get caught playing with paper, buy real gold! Buy physical!

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