Gold Finds a Few Friends near $1300

| September 24, 2013 | Category: Price

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As many already know by now, gold had been moving steadily lower throughout the New York trading session when a late-in-that-session small wave of buying brought the market back off its worst levels and actually allowed it to trade on the plus side of unchanged for a brief moment. I am unclear as to what the reason was that caused the bounced but it did occur rather rapidly and without much fanfare or fresh news that I saw. My thinking is that some shorts who faded the move higher on the release of last week’s FOMC statement, decided to ring the cash register when the market traded down both into a technical support level on the chart. Also, the market had completely surrendered all of the gains it put on related to that same FOMC release and then some. Perhaps the thinking was to go ahead and book some gains and wait for another bounce higher into which to sell.

It did not hurt gold also to have the HUI, which has been falling faster than Obama’s approval ratings, finally manage a bounce higher today. That, more than anything, seems to be to have been the catalyst for the move higher off of the lows at the Comex.

gold_chart_24_september_2013

Technically, market remains range bound between an overhead resistance zone noted on the chart and a support zone beneath the market which extends to psychological support at round number $1300 and to just below that level which is where the market bounced early in the session last Wednesday when the FOMC statement was released.

For gold to have a chance at moving higher now, it will need to take out that $1332 level. Whether it is setting up a large range trade between $1375 and $1305 or so remains to be seen. If it is repelled by $1332 – $1330, it will be seen as a strongly bearish reaction. If that is the case, I would look for aggressive selling that will test the bottom of support down near $1296.

The bulls bought themselves a bit of time today but they have a lot of work to attract some fresh converts to their cause.

With copper and silver both lower today, with crude oil moving lower and with the grains not managing more than a bounce higher at this point, any inflation issues that might be seen originating from the commodity complex are nowhere in sight at the present time.

Also, in what has to amount to an amazing slight of hand feat, the Fed, through its various talking heads, has managed to drive down that all important yield on the Ten Year Treasury note away from what I believe they are viewing is the DANGER ZONE of 3.0% yield. More than anything else, I believe that they are watching this very closely and will fine tune their comments and statements into corralling this particular instrument. Expect to see the DOVES appear on any approaches by the Ten Year back to that level.

Along that line, I believe gold will be ultra sensitive to this as well since it was talk about a rising interest rate environment that has been hurting the yellow metal.

10_year_chart_24_september_2013

(original source: Dan Norcini’s personal blog)

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