Gold Continues to Base Below $1800

By Tom Luongo in Gold and Oil News | October 2, 2012 22:21 | Tags: , ,

Gold attempted again this morning to mount an assault on the $1800 per ounce area.  While not as dramatic as yesterday’s spike high near $1794, today’s action in the moments before the COMEX open had gold bulls licking their chops until that market opened.  The selling started in the Silver pits at 8:25 EST and pushed the price back below $1780 for the rest of the day.

Anyone with even a passing understanding of how to read a stock chart can look at the area near $1800 per ounce on the Gold chart and see the importance of it.  If you can’t, then take a ruler and a sharpie and draw a line across a weekly 18 month chart.  You’ll see what I’m talking about.  Now, if you have any real trading experience you can spot capping action a mile away.  There are deep-pocketed people who have a short-term vested interest in trying to break the momentum of this current upswing in Gold prices.

The problem for them is that the fundamentals are now so overwhelmingly bullish in light of global QE to infinity that they are looking more like the Little Dutch Boy every day, and the chart is leaking.  Looking at the ultra-short time periods, like the hourly and 15-minute charts it is obvious that the bulls are buying at steadily higher prices on corrections putting more pressure on Gold (and silver as well as the cap at $35 is in place) with each passing day.

About Tom Luongo
Tom 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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