Today Is An Important Day For Gold

Includes: GLD
by: Kevin Wilbur

Today is the end of August's trading, and August proved to be a very good month for gold. The gold metals based GLD ETF has rallied from a current annual low on June 28th, exactly two month ago, of under $115 on an intraday basis, to an impressive comeback price above $135 at yesterday's close: a solid gain of over 20 points, or 17%. Analysts are now debating whether or not gold is overbought, and if it will reverse its price course again, and continue back into its two year slide to lower lows, or if instead it is headed towards a longer-term rally from here? The $135 price level is an important technical price target.

In addition to these impressive two months of gains and today being the close of the month of August and the beginning of a long and popular weekend in the U.S., the weekend is also overshadowed by significant international concerns in the Middle East. Syria remains front page news, the oil market is up strongly on possible Western military intervention in Syrian and related supply concerns, much of the commodity complex is following, and trader's additional favor for gold in such an international atmosphere would historically seem apparent.

Also, in Southwest Asia India's currency is again being hard hit this week, and gold's further attractiveness in that country, which already has a strong commercial appetite for gold, is further appreciating. The euro is sliding again late this week, which could also stimulate additional gold buying interest in Europe along with the current Syrian issue's impact. Many analysts in the U.S. are concerned with the potential of a September stock market sell-off here, which could also stimulate additional gold buying interest if stock market weakness from August continue into seasonally historically weaker September and the current sell-off in stocks accelerates. And September is right around the corner from today.

These fundamental reasons makes today an important day for gold. Especially regarding the question of whether or not it can hold onto prices at or above the $135 level on the GLD.

I also believe there are additional important technical considerations, from an EchoVector Analysis Perspective, that add particular importance and significance to today's trading in gold, especially with respect to September's overall price outlook. I will highlight these considerations on the following chart of the GLD ETF.

(Right click on image of chart to open image in new tab. Left click on the image opened in the new tab to further zoom EchoVector Analysis chart image illustrations and highlights.)


(Click to enlarge)

Looking at the above chart, we can see that on today's echo-back-date one year ago, Friday, August 31, 2012), gold prices surge forward. From that surge we see that a good follow-through occurred the week that followed further lifting gold prices an equally impressive amount. And in the next following week, we again had a surge that lifted prices again that amount to levels which proved to be close to our upward momentum top for the year. This new price level, achieved over these weeks last year, carried forward into last September's primary options expiration weekend. The period from Friday August 31st last year to two weeks later into the close of September expiration proved very important to gold prices, and that strong Friday at the end of August was key.

Additionally, we can also see that yesterday we closed on the annual echovector (dotted white) that constitutes the same active echovectors (solid white) for our preceding options expirations in August and July. Yesterday would be the third step up on that active echovector shown on the chart. This annual echovector runs from the Monday after primary options expiration in July 2012 to July 2013 and again from August 2012 to August 2013 in gold's climb from its prior lows two to three months earlier each year.

This annual echovector is very significant also for the fact that it has the same slope momentum as the two-year echovector running from the 2011 September top to this week's top on Tuesday. It is also significant that this echovector runs through this past Tuesday's weekly echo-back-date top last year, before trading moved into that Friday, and its price surge. This further indicates how this echovector contains a powerful and currently active price symmetry momentum echovector slope and that it is key to our present echovector analysis.

If we do not get the upside echo price strength that occurred last year today, a relative downward pivot in the annual echovector with a significant slope momentum force difference will start to occur. This will begin to show itself quickly today, and could only become more enhanced the next two weeks if gold prices fail to further sufficiently, or if they begin to falter altogether. This pivot would put additional downside weight on gold prices going forward. Also see the significant failure in gold prices after September options expiration in both 2011 and 2012. Added weight from a pivot in the annual echovector going into the next two weeks would only further weaken what appears to be a relative weak period coming up on an echovector basis after September expiration regardless.

If positive gold price action does occur today, and good price-lift and follow-through from it occurs the next two weeks into September's options expiration consistent with price levels gains that occurred each of the last two years, then gold bulls may become satisfied. The more positively sloped two-year aqua-blue echovector would then manifest itself forward further from its Monday, July 22, confirmation from the June 28th low. The gold market has been on a trajectory consistent with this $147.50 GLD ETF price target since its late June low, but I believe it has some heavy lifting to do the next two weeks in order to achieve this target. This certainly makes today (and the next two weeks it sets up) important in the gold market.

Thanks for reading. And good luck in your gold investing and trading.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in GLD, NUGT, SLV over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. I may also instead open a short term swing trade short if we do not proceed with sufficient upside the next 3 trading days.