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GCG14 – February Gold (Last:1224.300)

When was the last time we saw gold take a second leg up rather than simply give up whatever gains it may have achieved overnight?  It doesn’t happen too often, and that’s why beleaguered bulls may have felt something akin to exhilaration as yesterday’s $40 surge unfolded. Many of them are undoubtedly wondering whether the rally will turn out to have ended the bear market in bullion that began 27 months ago. It’s possible, of course. But technically speaking, the evidence still suggests that a Hidden Pivot target at 1125 first disseminated here a while back will eventually be achieved.

Even so, the bull deserves the benefit of the doubt for now, since both of Wednesday’s discrete thrusts did what a healthy bull is supposed to do — i.e., surpass at least two prior peaks on the hourly chart.  However, the December contract will have to repeat this feat, and soon, if we are to infer that significantly higher prices lie in store. Specifically, the futures will need to pop above the 1268.00 ‘external’ peak labeled in the chart (see inset). Were that to occur today, there would be little doubt that a significant rally — i.e., one with the power to continue for perhaps at least 7 to 10 days — is under way.

Incidentally, Comex Gold has been moving very precisely in relation to our proprietary Hidden Pivot targets.  Yesterday’s low at 1212.90, for one, lay just a single tick from the 1212.80 target first broached here several weeks ago when the December futures were trading around $1300. Although we had expected a tradable bounce from very near 1212.80 and had told subscribers to try bottom-fishing there, the $40 trampoline bounce in mere hours came as a pleasant surprise.  _______ UPDATE (5:45 p.m.): So much for the crazy idea that bullion bulls might enjoy favorable winds for two consecutive days (see inset, a fresh chart).  The futures are actually on a short-term ‘buy’ signal at the moment, but it is only for traders nimble enough to bail out if Wednesday’s rally turns out to have been a flash-in-the-pan. As implied above, buyers will need to push this vehicle to at least 1268.10 within the next day or two to avoid getting routed yet again.