It was a stunning week for the metal of monetary excellence. The technical breakout from horizontal resistance at$1633 per ounce was confirmed with a very bullish closing session for the week on Friday. Gold (AMEX:GLD) closed at $1670.75 on the October contract after the Globex session Friday afternoon. It hit an intraday high near $1678 but settled down on a mix of profit-taking and control near the next level of technical important, $1680-1690. Looking at monthly historical data for Gold, there is still room to the upside for this month, so next week will be interesting to say the least.
Gold has been putting in alternative up and down weeks for the past two months during this basing period of higher lows as physical buyers out of Asia have been stair-stepping up their bids, but every other Friday seems to be a down day to ensure that no 2 bar ‘rat reversal’ momentum buying comes into the market. Therefore, with September delivery futures expiring on Wednesday, it will be interesting to watch if a closing week can be engineered or if it will even matter at this point.
With the physical market dominating the price, massive central bank buying and even banking upheaval in Vietnam (causing local spot prices to jump north of $1800 per ounce) putting a floor under the price, will feeble attempts at chart-painting hold back what should be obvious as the beginning of the next major leg in the Gold bull market.
The markets turned on July 23rd when the Euro (AMEX:FXE) bottomed at $1.206 along with U.S. and Japanese treasuries. Gold is reflecting that change. Bears will get crushed from here.
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