Gold Due for a Pullback; Silver Approaching Resistance

I like gold here as an investment going forward- I just liked it a whole lot better a few weeks ago. I think we at the top of this wedge formation and due for a pullback and the RSI could come back to the previous high around 50. That would be very constructive and bullish allowing this metal to bust through 900 on its next run. While I don’t have a specific price target for where I think it will correct to, the 20-day moving average seems like a reasonable guess.

Obviously if tensions heat up in the Middle East this could fuel another rise in gold and all bets are off. However I’ve learned in the past not to underestimate gold’s ability to correct quickly so I took my profits on Friday and will enter on a pullback. I wanted to be flat going into next week as anything can happen when all the fund managers get back from vacation.

Silver has been up 6 straight days and is fast approaching resistance. I would rather it pause here and gather some strength to possibly break through the 11.75 area instead of shooting straight up using up all it’s firepower. Use any further strength to unload positions and wait for a pullback to add or establish new positions.

Comments

[NOWHEREMAN:]

Instead of trying to filter through a multitude of charts looking for the best ones that support your views.

Take a look at DZZ and then make a decision.

Jan 05 07:50 AM

[1977°C:]

I am watching GC ( have short futures ) with big interest and wonder why those investors on the buy side gave me a great opportunity to sell without even knowing me personally.
Let me explain why GC is down less than Crude Oil ,Palladium, Nickel or Rhodium it is down less for one very simple reason: most investors who bought mining stocks even 5 years ago (I don't even mention those buying in 2008) lost about everything or in best cases 50% which is not bad looking at any other sector in the global economy, so again why GC didn't crash?
The only reason for this that those that were listening to GC stories 1 year ago and missed big rally sitting on the sidelines, lately came to the market as watching GC that got symbolized last year that it is a best protection from all depressions and recessions plus in the booming leveraged world economy new middle class including billions Chinesse, Indians, Russians, Saudis will buy 1 gram of GC each (I remember such explanations) and the GC will be 2000-3000 $ in a blink of an eye.
So those who started to buy lately out of fear of beat market pushed the price to the opposite direction of Platinum price and making out of it the good opportunity to sell because demand for jewelry declines day by day and cash GC trading volumes already collapsed so those buying futures and options and stocks made a mini bubble that have nothing to do with GC demand when major jewelry stores worldwide and luxury industry in particular see their sales disappear overnight and in panic they cancel all their GC buy orders as inventory is full and it will take now years to sell existing stock.
Those of you who think that all commodities went down 50-70% in such a fast time and it is a joke, I wish you happy GC investing while those of you who understand that we are in the beginning of 1929 era ( who bought GC then?) that can last 30 years I advise sell all your physical GC. futures, mining stocks NOW.
GC very soon will make me very rich at 500 $.

Jan 05 07:54 AM

[silverwood:]

IN YOUR DREAMS....."GC very soon will make me very rich at 500 $."

Jan 05 09:10 AM

[silverwood:]

Looking at a chart of DZZ, which is a relatively new paper gold trading product, it appears that it has peaked in Nov. 08 and is now correcting. It is trading below both it's 50dma and 200dma which puts it in a bearish mode.


On Jan 05 07:50 AM NOWHEREMAN wrote:

> Instead of trying to filter through a multitude of charts looking
> for the best ones that support your views.
>
> Take a look at DZZ and then make a decision.

Jan 05 09:18 AM

[User 30121:]

Let's face it some posters KNOW when gold will TANK! The rest of us just wait to see what our illustrious government will do next (a la Franken for gov of Minn), and in the meantime, we just go out and buy PHYSICAL GOLD and SILVER...if we can find it!

Jan 05 09:57 AM

[Roger Knights:]

Right after the opening Monday, gold is down to 848. Time to hop back in?!?

Jan 05 10:17 AM

[Smarty_Pants:]

"Right after the opening Monday, gold is down to 848. Time to hop back in?" - Roger Knights

Probably not. Look at a daily chart of gold prices:

stockcharts.com/h-sc/u...=$GOLD&p=D&b=5...

Judging by previous price action, a pullback should bottom out somewhere between $780 and $820. That would be typical of a trending up market. Higher highs and higher lows.

A drop below $760 would be a sign that hopes for a strong bull market starting very soon are misplaced and further consolidation would be expected afterward, if not a further drop in price.

If prices decline and manage to stay above the $820 mark that would be a good sign of a possibly strong bull leg getting underway.

My 2 cents worth. Use at your own risk.

Jan 05 11:37 AM

[NOWHEREMAN:]

Silverwood: It also has the following characteristics.

Higher highs and Higher lows for its entire existence. With the latest low being the third point in its uptrend.

Deeply Oversold (MACD)and Positive Cash flow for the last 5 months or so.

Personally, I don't think gold goes to $500. But am looking for DZZ to hit a new high.

Too many gold/inflation now, comments. imo

Jan 05 01:43 PM

[Smarty_Pants:]

"Personally, I don't think gold goes to $500. But am looking for DZZ to hit a new high" - NOWHEREMAN

I agree on staying above $500. Whether DZZ makes a new high above 42 or not remains to be seen. It's possible, but I wouldn't make it the most likely result. It will depend on whether it can first break through overhead resistance at 33.

While it appears gold is beginning a possible retreat from recent strength, price action thus far is indicating further weakness might have difficulties continuing. Of course that can change quickly, so the only way to be sure is to see what happens and be ready to act when confirmation in either direction is apparent.

For DZZ that's a breakout of the 24.5 to 28.5 range with continuation. For gold its a breakout of the 830 to 890 range with continuation.
Heavy volume on any breakout would be an added confirmation as well.

Jan 05 02:19 PM

[NOWHEREMAN:]

The volume on GLD just jumped but that could just be a fuller complement on the trading floor.

I hinge everything on continuing dollar strength coupled with the deleveraging process which isn't close to completion. AM looking for the demise of at least 40% of all hedge funds.

Jan 05 04:08 PM

[scotty1560:]

imo gold is off the front page for a bit....fear has cooled off..dollar looks like
a rally until Euro finishes rate cuts....equities should rally and test 10,000
in next few months....famous last words...

Then the fun starts again...I see gold at $650-$900 for awhile....the run could be over, or it could make another move when dow has another major retraction..
Can't seem to keep the crystal ball shiny..so it's hard to say...

Jan 06 02:01 AM