Gold jumped back on a bullish track Wednesday as December futures pushed above a benchmark at 607.10 that we’d flagged here a couple of days earlier. From a Hidden-Pivot perspective, this feat would look more promising if the move above the two prior peaks shown in the chart had occurred in a single bound, so to speak, rather than in two separate segments. But the rally was nonetheless sufficient to lift the burden of proof from the bulls, at least for the moment, and to imply that buyers of bullion and precious metal shares may have the wind at their backs for a change.

 (Click on chart to enlarge)

One simple but reliable way to predict whether a rally is likely to continue is to ascertain whether each new thrust on the hourly chart has surpassed a visually distinctive peak to the left of it. A rally that falls just shy of this mark invites skepticism. Indeed, every new push above a prior peak or peaks, especially those recorded during the preceding and perhaps still-dominant downtrend, should be viewed as renewing and reinvigorating the bull. This mode of analysis is a key feature of the Hidden Pivot method, and it can be used not only to predict short- and intermediate-term price swings very precisely, but also to gauge a trend’s staying power with a high degree of confidence.

We did just that in Newmont Mining yesterday, by the way, projecting a rally top at either of two closely spaced Hidden Pivot targets not far above Tuesday’s settlement price. As it happened, the stock head-faked moderately higher in the opening minutes of the session, topping for the day at 44.15, the precise midpoint between our two targets, 44.10 and 44.21. Newmont plummeted $2.40 thereafter, or more than five percent, before bottoming at $41.75.

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