By Toby Connor, GoldScents

In my last post I noted that gold could give a major buy signal in the next 2-3 weeks. Let me stress again that patience is required right here. Gold has to confirm the intermediate rally first. That means it needs to break above $1268 and make a higher high. If it doesn't do that then no buy signal will be generated. Without a reversal of the pattern of lower lows and lower highs then this is just another weak bear market rally destined to roll over and break the bull’s hearts again.

So far every time gold gets close to breaking through the 1250-1260 resistance zone a huge seller materializes, usually in the pre-market, to dump several million oz. of paper gold on the market and drive gold back down. This happened again yesterday.

I can't stress enough that gold has to get above $1268 before the FOMC meeting next week. Gold can't enter the declining phase of its daily cycle from a position of weakness below $1268. If it does then they are going to beat the crap out of it, and there is a serious threat that they could break the intermediate rally.

If they do break the intermediate rally then we are going to see $1030 gold over the next 4-5 months.

There is a serious war ongoing for control of the paper gold market and the big seller won a major battle yesterday when it prevented gold from holding above $1250. Gold needs to recover immediately and get above $1268 so the declining phase of the daily cycle can begin from a position of strength, not weakness.

So let me stress again: This is still a very dangerous market. The manipulation has not ended. Wait till the next daily cycle bottom before jumping into the sector. That bottom has to hold above the Dec. 31 low, and the only way it's going to do that is if gold can get above $1268 before this cycle tops. That means it's going to have to fight off the continued manipulation that's holding it down.

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 -- Published: Wednesday, 22 January 2014 | E-Mail  | Print  | Source: GoldSeek.com

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