Gold Futures Make All Time New Highs

Even though the dollar was up today, gold surged higher based on news that the Reserve Bank of India bought 200 tons of gold from the IMF for $6.7 billion. Today gold made a new record high but silver has yet to break high.

Gold Update

Just a quick update on gold. Today gold reversed early morning weakness and rallied nicely into the close. The $97 support level that I pointed out last week worked like a charm. We'll see if gold and silver can muster up enough strength to test and break through the $100 level.

Gold ETF Tests The $100 Level

Gold was up again today and is now testing a very important resistance and psychological level that was made during March of last year. GLD traded as high as 100.02 today which is my first upside objective for the long trade I am in. I think we may see some profit taking at this very important level the first time tested but I also think there is a good chance we will move much higher.

If you look at the seasonal chart that I posted 6 days ago, you will notice that buying tends to really kick in around the middle of September leading into early October which is why I think we may see even more upside for this metal. Also keep in mind the weekly symmetrical triangle forecasts an upside target well over $100 for GLD. Let's see what happens!

Gold - Up Again

Gold opened higher this morning with an attempted sell off down to yesterday's high but buyers quickly stepped in and rallied this market. GLD closed up $1.27 from yesterday's close on increasing volume and range expansion. Looks like resisitance will soon be tested which is the high from February 20th of this year.

Gold - Weekly Symmetrical Triangle

Gold has not been doing much over the past few months but if you look at the weekly chart you will notice a large symmetrical triangle that has developed. The trend prior to the formation of the triangle was up so I will be looking to get long on an upside breakout of the triangle. Specifically the level I am watching is the 95.25 area. Until that price is taken out, I will remain on the sidelines as I have for most of the year for this market.

Gold And Silver's Price Swings

Above is a daily chart of gold and silver along with some basic swing and trendline analysis. As you can see both metals are making lower lows and lower highs which can mean only one thing, the current short-term trend is down.

For those of you who are bullish I would recommend waiting for the pattern of lower lows and lower highs to be broken. A move above the April 27th high would negate the downtrend and tilt the odds in favor of the bulls but until that happens the bears remain in control of these two metals.

Gold Stocks Show Bullish Divergence

As you know I've been bearish on gold for the past several weeks but am now beginning to see things change. Above is a daily chart of the XAU index (gold stocks) and in the lower pane is GLD (gold ETF). You'll notice on this last move down in gold, the XAU index is making a higher low and is showing bullish divergence.

The stochastic oscillator is also in the buy zone which tells me that gold stocks may be ready for the next leg up. For the past 5 months the stochastic indicator has done a wonderful job at timing the entry for a long trade. I don't have any buy signal right now but we are very close. As always, let's see what happens.

Gold - Which Way Will It Go

Gold has been relatively quiet over the last 2 weeks and I've been cautious to bearish on this metal for several reasons which I have written about in previous posts. One other reason which I haven't mentioned was that the volume on the down days has been much heavier than the volume on the up days. If you look at the above chart of GLD, you can see that since the high (February 20th) volume has been increasing significantly on the down days which is something we have not seen since this rally began several months ago. I think that's a good indication that money may be leaving this market.

Now let's be fair and take a look at why gold may rally. Gold is still in an uptrend and is holding its trend line which you can see in the above chart. The dollar is beginning to look a little heavy here which may provide a boost to gold and other commodities if the greenback does indeed sell off. I'll post later on why I think the dollar may be headed lower.

Now that I've confused you with my reasons why gold may move lower and possibly higher, I will share with you my strategy of how I plan to trade this market. In the above chart I marked off two levels which I consider important and will be watching very closely. The two levels are 92.95 and 87.47. I think a move above 92.95 will confirm that the short-term trend has turned higher and a test of last month's high is very likely. On the other hand, a move below 87.47 will confirm a clear breaking of the uptrend line and that further weakness can be expected.

So rather than guess which way gold is going to move, we'll let the market tell us and then we'll act accordingly. Hope this helps.

Gold Closes Below $900

Gold was down today closing below the psychological support level of $900. If you look at the above chart of GLD, you'll notice that the market closed below its 50 day moving average for the first time since this uptrend began. I will say however that GLD is now testing a very significant support level at 87.00 to 87.50 which is the uptrend line as well as the high from December.

Is Gold Ready To Go Back Up?

Last week GLD found support at the 50% retracement, the 50 day moving average as well as the bottom of a rising channel. In my opinion I think the bounce is technical in nature as every analyst out there is bullish on gold which makes last week's support level the ideal place to get back into this market.

I personally am cautious on gold and silver for several reasons. As I pointed out in a previous post, the gold stocks are not confirming this up move in the shiny metal. This non-confirmation is a red flag which alerts me to the possibility of gold selling off.

One another reason why I am cautious on gold is due to the fact that EVERYONE is bullish on gold and silver. I have not come across one analyst, blog or newsletter who is bearish or even cautious on gold. Whenever everyone agrees that the market is going to do a certain thing, it usually does the opposite!

Here's my take on gold. As long as gold continues to move higher you can stay long if you happen to be long already. I will however pay close attention to the lower channel line as a violation of this support line may signal further weakness for the yellow metal.

Caution On Gold Stocks

Above is a daily chart of the gold stocks index (XAU). Notice in the lower panel that the MACD has crossed after forming a bearish divergence. The XAU index also broke it's uptrend line.

In the chart below we'll take a look at gold stocks (XAU) vs Gold the commodity. Notice how Gold took out last summer's highs but the gold stocks have not. This is a very significant bearish divergence in my opinion.

Given the technical picture of both charts I have to be cautious/bearish on gold stocks. It's very hard to short the strongest group in the marketplace but if you do happen to be long these stocks, you may want to at least trail a close stop to lock in any gains that you may have on your existing long positions.

Gold Ignores Strength In The Dollar

Since November Gold has been trending higher making a series of higher highs and higher lows. If you look closely at the above chart you'll notice something very interesting that has taken place over the last few weeks.

We are all aware of the inverse relationship between gold and the dollar. As the dollar moves lower gold will rally. As the dollar moves higher gold will typically move lower. Notice what has taken place in the above chart between points (A) and (B). The dollar is moving higher and so is Gold! Gold should be moving lower in the face of a rising dollar but it's not. The means that gold is rallying on its own fundamentals and in my opinion is bullish for the price of gold. If the dollar sells off here, we could see Gold breakout above the high from last September. This market is definitely worth keeping an eye on.

Gold Swing Chart

I've outlined the basic swings on the above gold chart and as you can see this market is making lower highs and lower lows which means we are in a downtrend. If we are to assume that this downtrend will continue, it appears to me that we will see a test of the low from last November. The stochastics have also rolled over and are on a sell signal.

Gold - Still In A Downtrend

Today was another strong day for Gold but before you get too bullish on this metal I think we should look at the big picture. Above is a daily chart of GLD and as you can see I've outlined the basic swings. Notice how the Gold is making lower highs and lower lows which is the definition of a downtrend. Gold is also reaching a slightly overbought condition and is approaching an important trendline which may act as resistance. Even though I'd love to be bullish on this metal I will remain cautions because I still think the trend is down on a longer-term basis.

Gold - Stochastics Give A Bearish Sell Signal

Gold appears to be heading lower which has caused the stochastics to cross and give a bearish sell signal. You'll notice the majority of overbought stochastic sell signals for the gold market have been pretty accurate since March. Looks like a retest of last month's low is just days away.

Gold - The Trading Range Continues

The bear flag I pointed out last week in Gold turned out to be a false setup. If you look at the above chart of GLD you'll notice the trading range that has taken place over the past few weeks. There's also the potential for a double bottom but that pattern has NOT been confirmed. I'll remain on the sidelines until something happens.

Gold Breaks Down

Last weekend I posted about the bear flag in Gold that was setting up and as you can see in the above chart Gold is now selling off. I'll post my downside target for this metal either tomorrow or the day after.

Bear Flag In Gold

Gold has been in a downtrend and is now consolidating forming a bear flag. In fact, many of the foreign currencies have a similar chart to gold with the Euro forming a bear flag as well. I think if we see the dollar strengthen next week, that will trigger the next leg down for Gold, the Euro, Swiss Franc and British Pound.

Gold Stocks Index (XAU) Approaching Major Support

Gold was down today and so were the gold stocks. If you look at the above weekly chart of the XAU index you will see that this market is rapidly approaching a major support area.

I know some of you are short gold stocks which is why I am posting the above chart to alert you to the possibility of a short covering rally once this support level is tested. We still have a little more room left to the downside before the XAU hits support.

Getting Mixed Signals In Gold

Right now I'm getting mixed signals from gold, silver and platinum. If you look at the above chart you'll notice that both silver and platinum are much weaker than gold. In fact, platinum is making a new swing low while gold is forming what appears to be a higher low.

In order for me to be bullish on gold, I would prefer to see both platinum and silver making higher lows but we are not seeing that. In my opinion this creates a mixed picture which makes forecasting a move in gold a low probability situation. I will remain on the sidelines for now and wait for the next low risk trade to present itself.