Gold’s lesser charts are starting to resemble the EKG of a heart with electrical problems (see inset). The beats have been more or less regular, but the in-between activity has been feverish. Does this agitation portend an important change in gold’s behavior — an explosive move higher, perhaps, or a lurch to lower depths? Whatever the case, bullion has been moving in inverse lock-step with the broad averages. Even the headless-chicken burlesque touched off by Friday’s inscrutable employment news produced price movement in gold that mirrored the action in the S&Ps in reverse. I cannot fathom a reason for this, but the fact remains: gold seems to need for stocks to go up or down in order to move higher or lower itself.
From a technical standpoint, although gold’s rallies have been short-lived and unimpressive in recent weeks, the bad guys have been even less successful in promoting sell-offs. The result has been a steady ratcheting higher that, while less impressive than we might have hope for, is nonetheless sufficient to encourage. A further encouraging sign is that each new upthrust has surpassed an ‘external’ peak on the hourly chart. If the April contract is to continue in this pattern, it will need to achieve a minimum 1294.90 on the next burst. The significance of this number is evident on the hourly chart, in the form of an external peak at 1294.80 recorded on November 14. _______ UPDATE (February 10, 10:33 p.m. EST): The futures have retreated after peaking tonight at 1287.50. Although that’s somewhat shy of my 1294.90 benchmark, there should be little doubt it will be achieved. Traders looking to get aboard should use the several peaks made in mid-November for leverage. They display nicely on the hourly chart. _______ UPDATE (February 11, 1:16 p.m.): The 1294.40 high of this morning’s spike came within five ticks of our benchmark, so it’s time to use a new one: 1335.40. This is a Hidden Pivot target, and the accompanying chart shows its provenance. You should note as well that today’s decisive thrust through the midpoint resistance at 1286.50 is most encouraging, since it implies that its ‘D’ sibling at 1335.40 is now likely to be reached.