It took the XAU Gold & Silver Index four months to reach a Hidden Pivot resistance at 152.98 and only two hours to demolish it. How bullish is that? Very. We generally try to tone down our precious metals forecasts, since bullion’s rallies over the last year-and-a-half have done little but disappoint.  Indeed, for all but the most patient gold bugs, there have been too many false signals, almost, to endure. But we think yesterday’s thrust could prove to be the start of something big, for two reasons. First, as we noted above, it swept aside in mere hours a Hidden Pivot obstacle that we might have expected to hold back the tide for at least 2-3 weeks. And second, as you can see in the chart below, the rally created a robustly bullish impulse leg on the weekly chart, surpassing three prior peaks in a single bound.

(Click on chart to enlarge)

This is no small feat, technically speaking, and it has set the stage for a potentially much larger move to as high as 210.92, roughly 37 percent above these levels.  If the price of physical gold were to keep pace, that would imply a push to as high as $921, and to around $18 for silver.  The $921 target, a Hidden Pivot, lies within $14 of the $907 target broached here yesterday. We estimated that it had an approximately 40 percent chance of being reached within the next 4-5 months, but I’m going to raise the odds to 50 percent and allot more time – six to eight months instead of the five to seven months originally estimated.

What could cause bullion to break out after 18 months of tedious consolidation? We really don’t know. But if it is predictive of a commensurate rally in oil  prices to around $102,  it’s not going to be pretty for the U.S. economy or the global geopolitical scene. Whatever the case, we will be monitoring Gold’s (and oil’s) technical signs very closely, assessing the rally one bullish Hidden Pivot target at a time. We’ve provided two such targets in the Touts section of Rick’s Picks, and although the pattern we’ve used to identify these targets is not intuitively obvious, we are confident things will play out as predicted.