The buying picked up steam as it moved into very early European trading and continued to be firm as the action shifted into New York. One could see the attempt to cap the rally at $1600 by the bullion banks who no doubt had recruited some of the pit locals to their side but shortly after the close of lunch hour there in New York a burst of buying came in that startled the shorts for its intensity and drove them back decisively from the $1600 level.
The market pushed as high as $1608 ($1607.90) to be exact and has stayed strong going into the afternoon hours. This is no mean feat as one would normally expect a sizeable amount of profit taking from longs to come in at a round number like $1600, particularly after a rally of over $120 in the last two weeks time. I think the shorts were expecting that to occur also based on the attempt they were making to hold it below $1600. The idea is that they could induce a bout of long liquidation beginning with the short term oriented day traders who would be inclined to sell seeing the market stall at $1600. Instead of that occuring, some powerful long or group of longs came in and snatched up the offers to sell on the dip back below $1600 and then never let it go the rest of the session. If that group sticks around and pulls a repeat of today's showing, this thing will go to $1650 faster than some of us are already imagining.
Since we are basically in uncharted territory (unless we use an inflation adjusted chart to mark resistance levels) I am attempting some price projections levels to try to get an idea of where the technical chart resistance might appear. I am using the weekly chart to do so.
If you look at the chart below, one can see the solid red line that is the upper prong of the pitchfork which should provide some levels against which selling should enter. Above that is the center line of a longer based pitchfork (blue) which as you can see is well above $1700 and for the next few weeks out sets up a run towards $1720-$1750 should $1650 give way.
One thing I have also noticed about this chart is that while it shows the powerful uptrend that gold has been in since early 2009, the angle of ascent, even after the past two weeks strong showing, is still not all that steep. In other words, gold has not yet gone parabolic but is rising in a strong, yet relatively tempered fashion. For all the buying that has been and is presently occuring, there is not yet evidence of any PANIC. What there is evidence of is increasing fear and concern but not PANIC. It is that emotion which produces nearly vertical moves up.
Downside technical chart support remains near the previous all time high made earlier this year close to $1580 followed by stronger support near $1550. As said previously, the close above $1600 targets $1650 but as I honestly do not see much in the way of any sizeable technical resistance until then. There might be some selling at the $1625 level but that would be more psychological rather than technical in nature.
By the way, gold notched a print above the 1,000 British Pound level today as well as scoring another all time record high when priced in Euro terms. Clearly, it is trading as a currency as that makes three record highs now in three various major currency terms all in the same day.
