Gold Rockets Up Toward Resistance

The word of the day is Greece.  As in, the ditherers in Europe finally reached some kind of an agreement the details of how much this violates contract law is nicely broken down by Zerohedge here.  In response to this gold futures went for a spin on the wild side before hitting the brick wall of the 2% rule that exists for it on the COMEX.  Gold shot up to $1756 per ounce during New York trading, closing on the COMEX at $1753 per ounce.  It immediately shot up to $1760 once the COMEX closed and trading moved to the Globex.

Long term horizontal resistance on the chart is obvious in the $1765 region and a break of that price on a closing basis would signal a rapid move to $1800+ per ounce.  Of course, the way gold trades, if $1765 gives way it will likely bolt up to $1800 in about 15 minutes and then trade sideways until the bulls get discouraged by all the naked shorting going on.  A weekly close above $1800 would put the all-time high of $1926 in sight in a few weeks.  I would expect, though, that the fight for $1765 will be fierce.

We’ll know if the Federal Reserve is serious about trashing the U.S. Dollar if 30 year bond futures crack the 140.50 level.  That would be the signal that gold needs to make an effective stab at $1800.  If Greece is truly fixed, I don’t believe it either, but if it is true then the Fed will be able to get it’s stronger EURUSD cross and a booming stock market just in time for the election.

It will also have to accept gold north of $2000 per ounce.

 

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Tom Luongo

About Tom Luongo

Tom Luongo is a professional chemist and self-taught economist who has been following and trading stocks for nearly 12 years. He has no formal ties to the financial industry and considers that an asset in his analysis of the interplay between monetary policy and capital markets.

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