August Gold slid nearly $10 lower yesterday before gaining traction two ticks above our minimum downside target, 650.30. Had the carnage continued even $1.00 further it would have signaled a possible fall to a Hidden Pivot support well beneath these levels. (See the Rick’s Picks archive for the exact number.)

Thursday’s weakness had been telegraphed by the narrow failure of the August Comex contract to surpass a small prior peak on the intraday charts at the tail end of its most recent rally (see chart below).

(Click on chart to enlarge)

The shortfall led us to put out the following analysis and trading recommendation Wednesday night:  “By two ticks, Gold has failed to extend its two-week winning streak, leaving a small but nettlesome look-to-the-left high at 665.90 unbreached before turning sharply lower. Now, my minimum downside objective is 650.30, a midpoint Hidden Pivot support that you can bottom-fish cautiously if you please. I would suggest an initial stop-loss no wider than 4-5 ticks. We should monitor the action closely if and when that support is reached, since an easy penetration would hint of further downside over the next 2-3 weeks.”  

Bearish Tripwire

Officially we did not get in at the low, since our bid was two ticks beneath it. However, the forecast should have tempered the enthusiasm of subscribers who were long gold, and the pivot support itself will remain viable as a bearish tripwire.

Similarly, the Bond futures have provided clues literally each step of the way concerning the future direction of long-term interest rates.  We noted here the other day that the failure of the September T-Bond futures, by a single tick, to reach a Hidden Pivot rally target on their first bounce from the depths indicated that this rally could prove to be nothing more than a fleeting correction. That view was somewhat corroborated yesterday by a moderate selloff that created a minor bearish impulse leg on the intraday charts.  The impulse leg allows us to project a precise low that is given in the Touts section of Friday’s newsletter.  If that low should be exceeded even slightly today or Monday, it would be further evidence that the Bonds are about to relapse and yields to continue higher.