Hourly Action In Gold From Trader Dan
Posted: Apr 30 2010 By: Dan Norcini
April 30, 2010 at 1:47 pm
Filed under: Trader Dan Norcini
Dear CIGAs,
A strong showing in gold today as it was able to regain its footing after yesterday’s brief setback and then take out overhead selling resistance by the bullion banks located in and around the $1172 level. Once through there, it touched off upside buy stops which resulted in a quick move higher drawing in additional momentum related buying by the funds.
Technically the market looks very strong as all of the major moving averages are trending higher with price firmly above them. The weekly chart is showing a nice gradual move higher devoid of any sharp breakaway gaps which bodes well for continued movement higher. Markets that gap up have a tendency to work back lower to refill the gap before resuming the uptrend. In the case of the weekly gold chart, there are no upside gaps as of yet which is interpreted to mean that there has been no panic buying or panic short covering in gold. Rather the buying has been sustained and steady, which is ideal for continued upside progress. It is those panic moves which tend to flame out quickly once the emotions of traders have subsided.
The monthly chart of gold looks even better as it shows gold a mere $50 from its all time high with none of the technical indicators near the overbought level.
Gold priced in both Euro and British Pound terms made yet another new all time record high at the PM fix in London. Euro gold looks to be closing in on the €900 level and sterling gold is making a run towards £800. It will be interesting to see if it encounters any profit taking at these levels or whether the fears surrounding both currencies enable it to push through and continue moving upwards. If it does break through with relatively little selling resistance, look for gold priced in US Dollar terms to take out its all time high.
Incidentally, for you silver guys out there, silver priced in euro terms made a brand new all time high at its London fix today.
Gold is continuing to draw support from ongoing debt related fears out of Europe and a general wariness concerning the nature of run amok government spending in Washington. The out of control budget deficit is garnering more well-deserved attention by investors who see the profligacy as a cause for concern. Let’s face it, were it not for problems abroad, the US Dollar would be getting beaten with an ugly stick as Washington’s current spending spree makes Europe look conservative by comparison. AT least the Europeans are somewhat troubled by the fact that they need to bail out Greece and are probably going to end up backstopping Spain and Portugal at some point. Washington bails out anything that once moved and is now comatose with reckless abandon and irrepressive giddiness.
If that were not bad enough, now the Democrats are now yakking about mandating paid sick leave in a bill, Orwellian titled, “Healthy Families Act”, currently sponsored by the darling of the finance world, Chris Dodd in the Senate and Rep. DeLauro in the House.
Here is a brief summary of the bill:
"It would require companies that have 15 or more employees to provide one hour of paid sick leave for every 30 hours worked or up to seven sick days a year for a full-time worker…"
No doubt this is EXACTLY what the small business community wants to hear who are the very ones who are already struggling under a mountain of increasing government mandates and who incidentally, are the ones that are going to have to INCREASE hiring if this economy is ever going to start creating any real jobs. Make bricks without straw you small business owners – your overseers command it at the whim of the current would be Pharaoh.
I will send up a chart of the HUI a bit later in the day after the close. For now, it is looking strongly bullish on the weekly chart as the bulls push further away from horizontal resistance near 458. Barring a sell off between now and the close of trading, the weekly chart shows a confirmed technical breakout to the upside that should set up a trending type move with the potential to make a run toward the peak made back in last November.
In what must have Bernanke and the rest of the monetary crowd doing cartwheels down the halls, the long bond managed to confirm an upside breakout on its weekly chart and is now poised for a run towards 119^18. A push through that level and they are on course for a run toward 123. Yes indeed, we can conjure into existence as much debt as we want and still have idiots who will pay higher and higher prices for it receiving smaller and smaller yields. If only the American farmers could do the same with their corn, beans and wheat they would all be barons and nobles by now.
Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini
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