-- Posted Thursday, 12 October 2006 | Digg This Article
December Gold: Open= 577.5 High=583.0 Low=574.5 Close= 580.3 +3.8
The US trade balance widened to record levels in the last month. Crude Oil prices rejected new lows. The dollar was down. A trifecta of support for gold this morning yet prices remained firmly entrenched in this week’s trading range. Direction is still suspicious but a close above $585 might just spur some technical buying. A gap in the daily December Gold chart remains between $602 and $595 and provides an upside objective
With little in the way of news coming out today, there are only a few random thoughts to contemplate. One might be to consider what could cause gold to rally? While the outlook is a tad sour and support is suspect, we still are in international relations showdown with a nuclear power and one that itches to become one. Unconfirmed reports state that a United States naval aircraft carrier group is heading to the Straight of Hormuz, the entrance to the Arab Gulf. Is this action a normal rotation of aircraft groups or is the US sending a show of force to coast of Iran?
While my outlook is more neutral at this time as to price direction it would only take a spark to ignite the kindling being laid between the US and the ‘Axis of Evil’. From a different technical perspective Gold could be trading in a large bull flag or double bottom, easily seen on a weekly chart. The 50 day moving average sets up right at $600 on the weekly December chart, which also coincides with the top of the gap on the daily chart. A possible double bottom could appear in December Silver with a close above $12.00, which will be strong resistance, as well. The MACD has turned positive for silver and volume and open interest have also been rising the past week.
What conclusion is made? If the bears cannot press the market lower in the past week we might just change direction in the short term and see if the bulls can take out any resistance.
Price action remains supportive between $580 and $570 and is marking time. Look for the $560 level for major support. Note that this is a critical level and if breached could send the market reeling down to $520 -$500. The $600 to $620 range is tops for a major rally at this point, unless the facts change.
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-- Posted Thursday, 12 October 2006 | Digg This Article
