Gold Closes over $1680, Sets Up Bullish Breakout

By Tom Luongo in Gold and Oil News | January 17, 2013 1:19 |

I’ll make this brief.  If gold closes above $1678.50 tomorrow then that is a bullish 2-bar reversal on the weekly chart which cannot be ignored.  Considering how hard this level is being contested currently by the Exchange Stabilization Fund and others I will say with confidence that this latest downdraft — nearly wholly manufactured by the ESF in my opinion — is over and the bull market in Gold will be back on.

This would be the first two week uptrend since the peak at $1800 after the QEIII announcement.  Moreover, it will be a classic 2 bar reversal with the weekly close above the previous week’s high.  I would feel more comfortable making the breakout call with a close above $1700 but with option pain on GLD being $162 this month and options expiry tomorrow, that probability is low.  GLD closed today at $162.65.  I fully expect an attempt to bring it down to $161.99 tomorrow.

This has been an exceptionally low volatility week so far.  There is a strong possibility of a big move of some form tomorrow up or down because of it.  But at this point the Bundesbank has done the dirty work to give gold bulls a little more spring in their step as no one who is a serious watcher of these markets believes for a second that repatriating 15% of Germany’s gold reserves is nothing more than political appeasement to the libertarians living in Germany who are clamoring for a return to a gold-backed currency.


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