Zero Hedge

The melt up in stocks on no volume was fully expected after the worst possible employment news to come in over 20 years: the market-economy disconnect is now complete, and all stocks are freeriding purely on Bernanke’s printing press. At least gold vigilantes are beginning to whisper in Bernanke’s ear he can go fornicate himself and his dollar destruction deathwish: let’s see what happens when gold melts up ala the S&P to 1,200, 1,300 and maybe 1,500 in a few short weeks: can you spell panic at the Fed? Also next up: failed auctions, the only question is when and by whom…Oh wait, those never happen right… yeah, until they do.

October Gold closed lower due to profit taking on Friday as it consolidates some of this week’s rally but remains above last February’s high crossing at 1008.70. The low-range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are overbought, diverging but are neutral to bullish signaling that sideways to higher prices are possible near-term. This week’s breakout above February’s high has opened the door into uncharted territory and the possibility of significantly higher prices later this fall. Closes below the 20-day moving average crossing at 980.30 would confirm that a double top with February’s high has been posted. First resistance is Thursday’s high crossing at 1024.70. First support is the 10-day moving average crossing at 1003.70. Second support is the 20-day moving average crossing at 980.30.

As mentioned in the last couple reports we are currently waiting for a correction which will hopefully provides us with a low risk entry point. Since June we have been in a short term down trend, but the longer term trend is still up. Which is why we are looking for a buy signal and not a short. The past couple days we have seen gold and silver sell down. Complete Story

In our current 8-year bull market, June has seen the lowest return for gold and one of the best times to buy. Gold is one of the best forms of capital that can protect you in a financial Armageddon. That gold was up in 2008 is a reminder of its protective power. How much gold should you have? Continue to accumulate physical gold until you can honestly say you don’t care how many dollars Ben Bernanke prints,” reports BigGold editor Jeff Clark.

Courtesy of Chris Vermeulen www.GoldAndOilGuy.com

The bullish percent index tells us the percentage of gold stocks which currently have a point and figure buy signal. Looking at the charts below it looks as though precious metals are trading at support. I am inclined to think we will get a bounce this week for gold and silver.

Hui:Gold Ratio

When this chart is trending up gold bullion and gold stocks are in favor and rallying. This ratio is currently at a support level which is pointing towards a bounce in the near term. This is a weekly chart so we could be 1-2 weeks away before it shows up on the chart.

HUI – Gold Stocks Index

This is an index of gold stocks. We saw prices breakout and rally in May but now they are testing support. They could go either way quickly from here.

Gold Price Action – GLD Gold Fund

As you can see gold has pulled back from resistance is now at a possible support level. From looking at the HUI:GLD price performance and stochastic indicator at the bottom of the chart which is now turning up, it points to higher prices for gold in the short term.

Courtesy of  Clive Maund

Gold broke down and went into decline, as predicted in the last update posted early this month. At that time our maximum downside target was the strong support in the $880 area, but now there are strong signs that the decline has either run its course, or is close to having done so, and that a breakout to new highs may be close at hand.

On the 6-month chart we can see how the double bearish engulfing pattern at the highs led to gold going into retreat as expected, within a tightly defined downtrend. Although price action shows little sign of the downtrend ending, we can observe several strongly bullish influences that could lead to its ending anytime soon. One is the proximity of the rising 50-day moving average, while another is the bullish alignment of both moving averages, the 50 and 200-day. In addition the price has dropped back into a zone of support, and finally short-term oscillators have neutralized as a result of the reaction, renewing upside potential. Although helpful inasmuch as it enables us to examine recent action in detail, the 6-month chart is useless when it comes to divining the major trend and determining gold’s next big move. To do that we need to refer to longer-term charts.

Gold posted an inside day with a slightly higher close on Friday as it extended this week’s narrow trading range. The mid-range close sets the stage for a steady opening on Monday. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near-term. If August extends this month’s decline, the reaction low crossing at 917.00 is the next downside target. Closes above the 20-day moving average crossing at 955.90 would signal that a short-term low has been posted. First resistance is the 10-day moving average crossing at 942.90. Second resistance is the 20-day moving average crossing at 955.90. First support is Monday’s low crossing at 926.50. Second support is the reaction low crossing at 917.00.