Tuesday, January 8, 2013

Gold bounces from Support

Gold attracted relatively good buying today as it appeared SAFE HAVEN buying was back in vogue (at least for today). Chatter that I am picking up is that more investors/traders are growing concerned that we have dodged one fiscal cliff bullet only to have to face a ricochet sooner rather than later and deal with the whole problem all over again.

That led to weakness in stocks (along with the idea that earnings are going to disappoint as the numbers begin coming out) and instead saw money flow back into bonds, the safe haven currencies ( the Yen and the US Dollar) and into gold.

Also, anecdotal reports are coming in expressing very solid physical demand for the metal at current levels.

As stated yesterday, value based buying can provide a floor of support for a market and can bottom it but it takes more than that to actually propel a market higher into a strong sustained uptrend. That requires momentum based buying and so far that is lacking. When I wrote yesterday that gold was needing a catalyst to get it moving higher, my meaning was a TECHNICAL CHART catalyst to bring in hedge fund money on the buy side.

Right now, hedge funds are still liquidating longs or even adding to the short side to play gold. To get their friendly attention, gold will need to take out the resistance level noted on the chart and get at least TWO CONSECUTIVE CLOSES above that level or ONE SOLID CLOSE ABOVE the $1700 level that can then remain above $1680 on any subsequent price dip.

Downside chart support below $1640 and ranging to $1626 must hold or price will be at $1600 relatively quickly.





Between index fund rebalancing, confusion over the various conflicting statements coming out of the FEd governors and uncertainty regarding the health of any so-called global recovery, markets have been giving off some rather conflicting signals. I am hopeful that once we at least get through the index rebalancing we will get a clearer picture of what the markets in general want to do and gold in particular.

The HUI did manage to recover the broken support level of 420 by the time the trading session was closed but so far the shares are not providing any sort of lift to the sector at all.

6 comments:

  1. gr8 commentary! earnings season for the miners is also upon us...

    ReplyDelete
  2. Spot on Dan. Seems like a tweener time. Not sure where we go from here. Will Gold and gold stocks break ranks? I always get the feeling that the analyst can also alter stock prices by the "anticipated Street earnings reports". If they set the bar low, it allows all to cheer, if they keep setting the bar high for miners they kill em in a short feast fest. I for one am hoping some of the HUI miners kill it. Just for once make the shorts run. It has been a tough 2 years. The break from ETF's started in Sept 2011 and has not stopped. The ETF's keep rising while the miners are slaughtered. I just wish Dan that they could figure out a way to hold a bit and control the supply of gold.

    ReplyDelete
  3. Today is "Proof Positive" that Bernanke and the other Plutocrats have now attained 100% control of all markets.

    Notice that today (Wednesday), commodities of all stripes are getting bombed, while XLY is making a glorious run to new highs which is pushing stocks higher and higher.

    Meanwhile the government can continue financing unlimited access to EBT cards and other welfare programs for the "takers" because the 10-yr. yield is still a paltry 1.8%, now stuck under 2% for the longest time in recorded history.

    Any time inflation rears its ugly head, Bernanke simply needs to start "Pie-Holing" with words to send the Algos reeling again and dumping anything and everything in the CRB Index.

    Quite simply, 2009 - 2013 will go down as the most incredulous record in central banking policy, discussed for decades to come in the top economics schools.

    ReplyDelete
  4. "my meaning was a TECHNICAL CHART catalyst to bring in hedge fund money on the buy side."
    Thanks Dan.
    But then :
    - if fundamentals are not enough
    - if hedge funds are herded by their masters the Bullion Banks who have enough firepower to strike precisely at key technical resistances
    - if value buyers such as central banks can only create a floor to the prices, but not generate upward momentum

    Then it seems that the Bears (the manipulators, the bullion and consors, the bernank & bros as you wish) do control the market prices for the time being.
    And then it means that there is not much hope until :

    1) we've reached a solid floor where value buyers are interested (at least we will stop falling), OR
    2) the bears themselves are happy enough with their hidden physical long positions to revert their positions and become massively bull (cf Jim Sinclair's web site for more explanations about that), OR
    3) hyperinflation really begins and dollar collapses brutally

    which means, on the short term : patience, because the bears unfortunately control the prices, correct?
    Best regards,

    ReplyDelete
  5. I hope some hui miners killed it. Only this time make shorts run. This is a difficult 2 years. From the ETF break starting in September of 2011, no stop. ETF continue to rise, the miners were killed. I just hope Dan, they can find a way to hold a bit and control the supply of gold.
    cheap nike jerseys

    ReplyDelete
  6. Note, today (Wednesday), all kinds of goods, and more and more bombing XLY is glorious run to new highs and push up the stock market and higher.
    Meanwhile, the government can continue to financing unrestrainedly everbright communication card and other welfare project "receiver", for ten years. Production is still a negligible 1.8%, now card below 2% of the longest recorded history. Cheap Jerseys from china

    ReplyDelete

Note: Only a member of this blog may post a comment.