Gold has begun to fulfill the bullish of our two scenarios outlined yesterday, but the lack of follow-through leaves the market in a neutral posture ahead of the Federal Reserve’s policy meeting today. The futures pulled back to 1692.50 on Monday and then rallied enough to confirm the bullish pattern that we suggested might emerge, giving us a midpoint pivot at 1712.70 and a “D” target at 1732.90. The latter is a few ticks below the midpoint of a larger pattern that we described last week whose “A” point was on January 25 at 1652.20. That pattern’s midpoint is at 1733.60, and if gold can rally into that area it is likely to encounter resistance. A move above $1735 would suggest continued bullishness. By contrast, if the market declines to 1685.10, the large bearish pattern described yesterday would be confirmed. A short-sale of the 1712.70 pivot should involve a stop no lower than 1713.20. Traders should not have orders working at 2:15pm Eastern Time when the Fed announces its intentions. (Posted by Doug “harry” McLagan)
